Correlation Between MACOM Technology and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and AAC TECHNOLOGHLDGADR 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 MACOM Technology and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on MACOM Technology and AAC TECHNOLOGHLDGADR 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 MACOM Technology with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for MACOM Technology and AAC TECHNOLOGHLDGADR
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MACOM and AAC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and MACOM 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 MACOM Technology Solutions are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of MACOM Technology i.e., MACOM Technology and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between MACOM Technology and AAC TECHNOLOGHLDGADR
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 0.68 times more return on investment than AAC TECHNOLOGHLDGADR. However, MACOM Technology Solutions is 1.47 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.1 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.07 per unit of risk. If you would invest 5,800 in MACOM Technology Solutions on August 28, 2024 and sell it today you would earn a total of 7,000 from holding MACOM Technology Solutions or generate 120.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
MACOM Technology Solutions vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| MACOM Technology Sol |
| AAC TECHNOLOGHLDGADR |
MACOM Technology and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite MACOM Technology and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| MACOM Technology vs. Major Drilling Group | MACOM Technology vs. G III Apparel Group | MACOM Technology vs. AUSNUTRIA DAIRY | MACOM Technology vs. AM EAGLE OUTFITTERS |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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