Correlation Between Acelon Chemicals and Silicon Power
Can any of the company-specific risk be diversified away by investing in both Acelon Chemicals and Silicon Power 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 Silicon Power 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 Silicon Power Computer, you can compare the effects of market volatilities on Acelon Chemicals and Silicon Power 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 Silicon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acelon Chemicals and Silicon Power.
Diversification Opportunities for Acelon Chemicals and Silicon Power
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acelon and Silicon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Acelon Chemicals Fiber and Silicon Power Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Power Computer 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 Silicon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Power Computer has no effect on the direction of Acelon Chemicals i.e., Acelon Chemicals and Silicon Power go up and down completely randomly.
Pair Corralation between Acelon Chemicals and Silicon Power
Assuming the 90 days trading horizon Acelon Chemicals Fiber is expected to generate 1.4 times more return on investment than Silicon Power. However, Acelon Chemicals is 1.4 times more volatile than Silicon Power Computer. It trades about 0.03 of its potential returns per unit of risk. Silicon Power Computer is currently generating about -0.04 per unit of risk. If you would invest 1,130 in Acelon Chemicals Fiber on November 3, 2024 and sell it today you would earn a total of 55.00 from holding Acelon Chemicals Fiber or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acelon Chemicals Fiber vs. Silicon Power Computer
Performance |
| Timeline |
| Acelon Chemicals Fiber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Silicon Power Computer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Acelon Chemicals and Silicon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acelon Chemicals and Silicon Power
The main advantage of trading using opposite Acelon Chemicals and Silicon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acelon Chemicals position performs unexpectedly, Silicon Power 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 Silicon Power will offset losses from the drop in Silicon Power's long position.The idea behind Acelon Chemicals Fiber and Silicon Power Computer 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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