Correlation Between Alchip Technologies and Asmedia Technology

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

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

Diversification Opportunities for Alchip Technologies and Asmedia Technology

0.33

Correlation Coefficient

Alchip Technologies  Asmedia Technology

Weak diversification

The 3 months correlation between Alchip and Asmedia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alchip Technologies and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology and Alchip 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 Alchip Technologies are associated (or correlated) with Asmedia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asmedia Technology has no effect on the direction of Alchip Technologies i.e., Alchip Technologies and Asmedia Technology go up and down completely randomly.

Pair Corralation between Alchip Technologies and Asmedia Technology

Assuming the 90 days trading horizon Alchip Technologies is expected to under-perform the Asmedia Technology. But the stock apears to be less risky and, when comparing its historical volatility, Alchip Technologies is 1.03 times less risky than Asmedia Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Asmedia Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  177,000  in Asmedia Technology on August 30, 2024 and sell it today you would lose (17,000) from holding Asmedia Technology or give up 9.6% of portfolio value over 90 days.

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

Alchip Technologies  vs.  Asmedia Technology

Alchip Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alchip 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 December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Asmedia Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asmedia Technology 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 Alchip Technologies and Asmedia Technology

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

The idea behind Alchip Technologies and Asmedia Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.