Correlation Between Acer and HTC Corp
Can any of the company-specific risk be diversified away by investing in both Acer and HTC Corp 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 Acer and HTC Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acer Inc and HTC Corp, you can compare the effects of market volatilities on Acer and HTC Corp 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 Acer with a short position of HTC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acer and HTC Corp.
Diversification Opportunities for Acer and HTC Corp
Good diversification
The 3 months correlation between Acer and HTC is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Acer Inc and HTC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HTC Corp and Acer 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 Acer Inc are associated (or correlated) with HTC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HTC Corp has no effect on the direction of Acer i.e., Acer and HTC Corp go up and down completely randomly.
Pair Corralation between Acer and HTC Corp
Assuming the 90 days trading horizon Acer Inc is expected to under-perform the HTC Corp. But the stock apears to be less risky and, when comparing its historical volatility, Acer Inc is 2.27 times less risky than HTC Corp. The stock trades about -0.18 of its potential returns per unit of risk. The HTC Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 5,120 in HTC Corp on October 29, 2024 and sell it today you would earn a total of 800.00 from holding HTC Corp or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acer Inc vs. HTC Corp
Performance |
| Timeline |
| Acer Inc |
| HTC Corp |
Acer and HTC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acer and HTC Corp
The main advantage of trading using opposite Acer and HTC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acer position performs unexpectedly, HTC Corp 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 HTC Corp will offset losses from the drop in HTC Corp's long position.The idea behind Acer Inc and HTC Corp 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.| HTC Corp vs. Hon Hai Precision | HTC Corp vs. MediaTek | HTC Corp vs. Acer Inc | HTC Corp vs. Asustek Computer |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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