Correlation Between Chaintech Technology and Avision

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

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

Diversification Opportunities for Chaintech Technology and Avision

0.06

Correlation Coefficient

Chaintech Technology  Avision

Significant diversification

The 3 months correlation between Chaintech and Avision is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Chaintech Technology Corp and Avision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avision and Chaintech Technology 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 Chaintech Technology Corp are associated (or correlated) with Avision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avision has no effect on the direction of Chaintech Technology i.e., Chaintech Technology and Avision go up and down completely randomly.

Pair Corralation between Chaintech Technology and Avision

Assuming the 90 days trading horizon Chaintech Technology Corp is expected to generate 2.2 times more return on investment than Avision. However, Chaintech Technology is 2.2 times more volatile than Avision. It trades about 0.09 of its potential returns per unit of risk. Avision is currently generating about -0.1 per unit of risk. If you would invest  3,825  in Chaintech Technology Corp on June 22, 2024 and sell it today you would earn a total of  650.00  from holding Chaintech Technology Corp or generate 16.99% return on investment over 90 days.

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

Chaintech Technology Corp  vs.  Avision

Chaintech Technology Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chaintech Technology Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chaintech Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Avision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avision 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 Chaintech Technology and Avision

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

The idea behind Chaintech Technology Corp and Avision 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.