Correlation Between Kinko Optical and AVerMedia Technologies

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

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

Diversification Opportunities for Kinko Optical and AVerMedia Technologies

0.74

Correlation Coefficient

Kinko Optical  AVerMedia Technologies

Poor diversification

The 3 months correlation between Kinko and AVerMedia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kinko Optical Co and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies and Kinko Optical 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 Kinko Optical Co 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 Kinko Optical i.e., Kinko Optical and AVerMedia Technologies go up and down completely randomly.

Pair Corralation between Kinko Optical and AVerMedia Technologies

Assuming the 90 days trading horizon Kinko Optical Co is expected to generate 0.65 times more return on investment than AVerMedia Technologies. However, Kinko Optical Co is 1.53 times less risky than AVerMedia Technologies. It trades about -0.07 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about -0.11 per unit of risk. If you would invest  2,600  in Kinko Optical Co on September 3, 2024 and sell it today you would lose (155.00) from holding Kinko Optical Co or give up 5.96% of portfolio value over 90 days.

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

Kinko Optical Co  vs.  AVerMedia Technologies

Kinko Optical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinko Optical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kinko Optical 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 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 Kinko Optical and AVerMedia Technologies

The main advantage of trading using opposite Kinko Optical and AVerMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinko Optical 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 Kinko Optical Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.