Correlation Between AVerMedia Technologies and Globe Union

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

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

Diversification Opportunities for AVerMedia Technologies and Globe Union

0.84

Correlation Coefficient

AVerMedia Technologies  Globe Union

Very poor diversification

The 3 months correlation between AVerMedia and Globe is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AVerMedia Technologies and Globe Union Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Union Industrial 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 Globe Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Union Industrial has no effect on the direction of AVerMedia Technologies i.e., AVerMedia Technologies and Globe Union go up and down completely randomly.

Pair Corralation between AVerMedia Technologies and Globe Union

Assuming the 90 days trading horizon AVerMedia Technologies is expected to generate 1.14 times more return on investment than Globe Union. However, AVerMedia Technologies is 1.14 times more volatile than Globe Union Industrial. It trades about -0.07 of its potential returns per unit of risk. Globe Union Industrial is currently generating about -0.24 per unit of risk. If you would invest  4,480  in AVerMedia Technologies on September 5, 2024 and sell it today you would lose (400.00) from holding AVerMedia Technologies or give up 8.93% of portfolio value over 90 days.

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

AVerMedia Technologies  vs.  Globe Union Industrial

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.

Globe Union Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Union Industrial 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.

Pair Trading with AVerMedia Technologies and Globe Union

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

The idea behind AVerMedia Technologies and Globe Union Industrial 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.