Correlation Between Acelon Chemicals and Topco Technologies

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Can any of the company-specific risk be diversified away by investing in both Acelon Chemicals and Topco 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 Acelon Chemicals and Topco Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acelon Chemicals Fiber and Topco Technologies, you can compare the effects of market volatilities on Acelon Chemicals and Topco 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 Acelon Chemicals with a short position of Topco Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acelon Chemicals and Topco Technologies.

Diversification Opportunities for Acelon Chemicals and Topco Technologies

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Acelon and Topco is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Acelon Chemicals Fiber and Topco Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topco Technologies and Acelon Chemicals 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 Acelon Chemicals Fiber are associated (or correlated) with Topco Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topco Technologies has no effect on the direction of Acelon Chemicals i.e., Acelon Chemicals and Topco Technologies go up and down completely randomly.

Pair Corralation between Acelon Chemicals and Topco Technologies

Assuming the 90 days trading horizon Acelon Chemicals Fiber is expected to generate 6.68 times more return on investment than Topco Technologies. However, Acelon Chemicals is 6.68 times more volatile than Topco Technologies. It trades about 0.03 of its potential returns per unit of risk. Topco Technologies is currently generating about -0.01 per unit of risk. If you would invest  1,300  in Acelon Chemicals Fiber on September 13, 2024 and sell it today you would earn a total of  20.00  from holding Acelon Chemicals Fiber or generate 1.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.73%
ValuesDaily Returns

Acelon Chemicals Fiber  vs.  Topco Technologies

 Performance 
       Timeline  
Acelon Chemicals Fiber 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Acelon Chemicals Fiber are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acelon Chemicals may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Topco Technologies 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Topco Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Topco Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Acelon Chemicals and Topco Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acelon Chemicals and Topco Technologies

The main advantage of trading using opposite Acelon Chemicals and Topco Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acelon Chemicals position performs unexpectedly, Topco 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 Topco Technologies will offset losses from the drop in Topco Technologies' long position.
The idea behind Acelon Chemicals Fiber and Topco 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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