Correlation Between Chroma ATE and Accton Technology
Can any of the company-specific risk be diversified away by investing in both Chroma ATE and Accton Technology 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 Chroma ATE and Accton Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chroma ATE and Accton Technology Corp, you can compare the effects of market volatilities on Chroma ATE and Accton Technology 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 Chroma ATE with a short position of Accton Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chroma ATE and Accton Technology.
Diversification Opportunities for Chroma ATE and Accton Technology
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chroma and Accton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chroma ATE and Accton Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accton Technology Corp and Chroma ATE 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 Chroma ATE are associated (or correlated) with Accton Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accton Technology Corp has no effect on the direction of Chroma ATE i.e., Chroma ATE and Accton Technology go up and down completely randomly.
Pair Corralation between Chroma ATE and Accton Technology
Assuming the 90 days trading horizon Chroma ATE is expected to generate 10.66 times less return on investment than Accton Technology. In addition to that, Chroma ATE is 1.21 times more volatile than Accton Technology Corp. It trades about 0.03 of its total potential returns per unit of risk. Accton Technology Corp is currently generating about 0.33 per unit of volatility. If you would invest 55,300 in Accton Technology Corp on August 30, 2024 and sell it today you would earn a total of 10,500 from holding Accton Technology Corp or generate 18.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chroma ATE vs. Accton Technology Corp
Performance |
| Timeline |
| Chroma ATE |
| Accton Technology Corp |
Chroma ATE and Accton Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chroma ATE and Accton Technology
The main advantage of trading using opposite Chroma ATE and Accton Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chroma ATE position performs unexpectedly, Accton Technology 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 Accton Technology will offset losses from the drop in Accton Technology's long position.The idea behind Chroma ATE and Accton Technology 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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