Correlation Between AVerMedia Technologies and First Steamship

Can any of the company-specific risk be diversified away by investing in both AVerMedia Technologies and First Steamship 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 AVerMedia Technologies and First Steamship into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AVerMedia Technologies and First Steamship Co, you can compare the effects of market volatilities on AVerMedia Technologies and First Steamship 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 AVerMedia Technologies with a short position of First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and First Steamship.

Diversification Opportunities for AVerMedia Technologies and First Steamship

-0.18

Correlation Coefficient

AVerMedia Technologies  First Steamship

Good diversification

The 3 months correlation between AVerMedia and First is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and First Steamship Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Steamship and AVerMedia Technologies 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 AVerMedia Technologies are associated (or correlated) with First Steamship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Steamship has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and First Steamship go up and down completely randomly.

Pair Corralation between AVerMedia Technologies and First Steamship

Assuming the 90 days trading horizon AVerMedia Technologies is expected to under-perform the First Steamship. But the stock apears to be less risky and, when comparing its historical volatility, AVerMedia Technologies is 1.22 times less risky than First Steamship. The stock trades about -0.05 of its potential returns per unit of risk. The First Steamship Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  705.00  in First Steamship Co on September 12, 2024 and sell it today you would earn a total of  38.00  from holding First Steamship Co or generate 5.39% return on investment over 90 days.

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

AVerMedia Technologies  vs.  First Steamship Co

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 fairly stable basic indicators, AVerMedia Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Steamship

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Steamship Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, First Steamship may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AVerMedia Technologies and First Steamship

The main advantage of trading using opposite AVerMedia Technologies and First Steamship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVerMedia Technologies position performs unexpectedly, First Steamship 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 First Steamship will offset losses from the drop in First Steamship's long position.

The idea behind AVerMedia Technologies and First Steamship Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..