Correlation Between GlobalWafers and Averlogic Technologies

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

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

Diversification Opportunities for GlobalWafers and Averlogic Technologies

-0.73

Correlation Coefficient

GlobalWafers  Averlogic Technologies

Pay attention - limited upside

The 3 months correlation between GlobalWafers and Averlogic is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Averlogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Averlogic Technologies and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Averlogic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Averlogic Technologies has no effect on the direction of GlobalWafers i.e., GlobalWafers and Averlogic Technologies go up and down completely randomly.

Pair Corralation between GlobalWafers and Averlogic Technologies

Assuming the 90 days trading horizon GlobalWafers is expected to generate 9.88 times less return on investment than Averlogic Technologies. But when comparing it to its historical volatility, GlobalWafers Co is 1.59 times less risky than Averlogic Technologies. It trades about 0.01 of its potential returns per unit of risk. Averlogic Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,430  in Averlogic Technologies on February 7, 2024 and sell it today you would earn a total of  2,930  from holding Averlogic Technologies or generate 85.42% return on investment over 90 days.

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

GlobalWafers Co  vs.  Averlogic Technologies

GlobalWafers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Averlogic Technologies

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Averlogic Technologies are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Averlogic Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GlobalWafers and Averlogic Technologies

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

The idea behind GlobalWafers Co and Averlogic 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 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.