Correlation Between Parade Technologies and Accton Technology
Can any of the company-specific risk be diversified away by investing in both Parade Technologies 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 Parade Technologies and Accton Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parade Technologies and Accton Technology Corp, you can compare the effects of market volatilities on Parade Technologies 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 Parade Technologies with a short position of Accton Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parade Technologies and Accton Technology.
Diversification Opportunities for Parade Technologies and Accton Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Parade and Accton is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Parade Technologies 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 Parade Technologies 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 Parade Technologies 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 Parade Technologies i.e., Parade Technologies and Accton Technology go up and down completely randomly.
Pair Corralation between Parade Technologies and Accton Technology
Assuming the 90 days trading horizon Parade Technologies is expected to under-perform the Accton Technology. But the stock apears to be less risky and, when comparing its historical volatility, Parade Technologies is 1.23 times less risky than Accton Technology. The stock trades about -0.17 of its potential returns per unit of risk. The Accton Technology Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 57,300 in Accton Technology Corp on August 27, 2024 and sell it today you would earn a total of 6,700 from holding Accton Technology Corp or generate 11.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parade Technologies vs. Accton Technology Corp
Performance |
| Timeline |
| Parade Technologies |
| Accton Technology Corp |
Parade Technologies and Accton Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parade Technologies and Accton Technology
The main advantage of trading using opposite Parade Technologies and Accton Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parade Technologies 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.| Parade Technologies vs. Global Unichip Corp | Parade Technologies vs. Asmedia Technology | Parade Technologies vs. Unimicron Technology Corp | Parade Technologies vs. Novatek Microelectronics Corp |
| Accton Technology vs. Novatek Microelectronics Corp | Accton Technology vs. Quanta Computer | Accton Technology vs. United Microelectronics |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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