Correlation Between Shinkong Synthetic and AVerMedia Technologies

Can any of the company-specific risk be diversified away by investing in both Shinkong Synthetic and AVerMedia Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shinkong Synthetic and AVerMedia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shinkong Synthetic Fiber and AVerMedia Technologies, you can compare the effects of market volatilities on Shinkong Synthetic and AVerMedia Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shinkong Synthetic with a short position of AVerMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Synthetic and AVerMedia Technologies.

Diversification Opportunities for Shinkong Synthetic and AVerMedia Technologies

0.73

Correlation Coefficient

Shinkong Synthetic  AVerMedia Technologies

Poor diversification

The 3 months correlation between Shinkong and AVerMedia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Synthetic Fiber and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies and Shinkong Synthetic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shinkong Synthetic Fiber are associated (or correlated) with AVerMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVerMedia Technologies has no effect on the direction of Shinkong Synthetic i.e., Shinkong Synthetic and AVerMedia Technologies go up and down completely randomly.

Pair Corralation between Shinkong Synthetic and AVerMedia Technologies

Assuming the 90 days trading horizon Shinkong Synthetic Fiber is expected to generate 0.54 times more return on investment than AVerMedia Technologies. However, Shinkong Synthetic Fiber is 1.86 times less risky than AVerMedia Technologies. It trades about 0.03 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about -0.07 per unit of risk. If you would invest  1,565  in Shinkong Synthetic Fiber on September 5, 2024 and sell it today you would earn a total of  30.00  from holding Shinkong Synthetic Fiber or generate 1.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Shinkong Synthetic Fiber  vs.  AVerMedia Technologies

Shinkong Synthetic Fiber

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinkong Synthetic Fiber are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shinkong Synthetic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AVerMedia Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AVerMedia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Shinkong Synthetic and AVerMedia Technologies

The main advantage of trading using opposite Shinkong Synthetic and AVerMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Synthetic position performs unexpectedly, AVerMedia Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AVerMedia Technologies will offset losses from the drop in AVerMedia Technologies' long position.

The idea behind Shinkong Synthetic Fiber and AVerMedia Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.