Correlation Between AviChina Industry and Broadcom

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

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

Diversification Opportunities for AviChina Industry and Broadcom

0.84

Correlation Coefficient

AviChina Industry  Broadcom

Very poor diversification

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

Pair Corralation between AviChina Industry and Broadcom

Assuming the 90 days horizon AviChina Industry Technology is expected to under-perform the Broadcom. In addition to that, AviChina Industry is 1.16 times more volatile than Broadcom. It trades about -0.03 of its total potential returns per unit of risk. Broadcom is currently generating about 0.02 per unit of volatility. If you would invest  22,886  in Broadcom on April 6, 2025 and sell it today you would earn a total of  104.00  from holding Broadcom or generate 0.45% return on investment over 90 days.

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

AviChina Industry Technology  vs.  Broadcom

AviChina Industry

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AviChina Industry Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AviChina Industry reported solid returns over the last few months and may actually be approaching a breakup point.

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Broadcom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AviChina Industry and Broadcom

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

The idea behind AviChina Industry Technology and Broadcom 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.

Check out your portfolio center.

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.