Correlation Between AVerMedia Technologies and Wholetech System

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

By analyzing existing cross correlation between AVerMedia Technologies and Wholetech System Hitech, you can compare the effects of market volatilities on AVerMedia Technologies and Wholetech System 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 Wholetech System. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVerMedia Technologies and Wholetech System.

Diversification Opportunities for AVerMedia Technologies and Wholetech System

0.49

Correlation Coefficient

AVerMedia Technologies  Wholetech System

Very weak diversification

The 3 months correlation between AVerMedia and Wholetech is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Wholetech System Hitech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wholetech System Hitech 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 Wholetech System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wholetech System Hitech has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Wholetech System go up and down completely randomly.

Pair Corralation between AVerMedia Technologies and Wholetech System

Assuming the 90 days trading horizon AVerMedia Technologies is expected to under-perform the Wholetech System. But the stock apears to be less risky and, when comparing its historical volatility, AVerMedia Technologies is 1.14 times less risky than Wholetech System. The stock trades about -0.11 of its potential returns per unit of risk. The Wholetech System Hitech is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  11,000  in Wholetech System Hitech on September 3, 2024 and sell it today you would lose (750.00) from holding Wholetech System Hitech or give up 6.82% of portfolio value over 90 days.

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

AVerMedia Technologies  vs.  Wholetech System Hitech

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Wholetech System Hitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wholetech System Hitech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wholetech System is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AVerMedia Technologies and Wholetech System

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

The idea behind AVerMedia Technologies and Wholetech System Hitech 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.