Correlation Between FIRST SAVINGS and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both FIRST SAVINGS 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 FIRST SAVINGS and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SAVINGS FINL and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on FIRST SAVINGS 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 FIRST SAVINGS with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SAVINGS and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for FIRST SAVINGS and AAC TECHNOLOGHLDGADR
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FIRST and AAC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SAVINGS FINL and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and FIRST SAVINGS 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 FIRST SAVINGS FINL 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 FIRST SAVINGS i.e., FIRST SAVINGS and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between FIRST SAVINGS and AAC TECHNOLOGHLDGADR
Assuming the 90 days horizon FIRST SAVINGS FINL is expected to under-perform the AAC TECHNOLOGHLDGADR. But the stock apears to be less risky and, when comparing its historical volatility, FIRST SAVINGS FINL is 1.1 times less risky than AAC TECHNOLOGHLDGADR. The stock trades about -0.14 of its potential returns per unit of risk. The AAC TECHNOLOGHLDGADR is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 350.00 in AAC TECHNOLOGHLDGADR on October 19, 2024 and sell it today you would earn a total of 94.00 from holding AAC TECHNOLOGHLDGADR or generate 26.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SAVINGS FINL vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| FIRST SAVINGS FINL |
| AAC TECHNOLOGHLDGADR |
FIRST SAVINGS and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SAVINGS and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite FIRST SAVINGS and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SAVINGS 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.| FIRST SAVINGS vs. POSBO UNSPADRS20YC1 | FIRST SAVINGS vs. Postal Savings Bank | FIRST SAVINGS vs. Truist Financial | FIRST SAVINGS vs. OVERSEA CHINUNSPADR2 |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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