Correlation Between AAC TECHNOLOGHLDGADR and WPP PLC
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and WPP PLC 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 AAC TECHNOLOGHLDGADR and WPP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and WPP PLC, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and WPP PLC 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 AAC TECHNOLOGHLDGADR with a short position of WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and WPP PLC.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and WPP PLC
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and WPP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and WPP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR are associated (or correlated) with WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and WPP PLC go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and WPP PLC
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 5.0 times more return on investment than WPP PLC. However, AAC TECHNOLOGHLDGADR is 5.0 times more volatile than WPP PLC. It trades about 0.07 of its potential returns per unit of risk. WPP PLC is currently generating about -0.53 per unit of risk. If you would invest 444.00 in AAC TECHNOLOGHLDGADR on October 9, 2024 and sell it today you would earn a total of 14.00 from holding AAC TECHNOLOGHLDGADR or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. WPP PLC
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| WPP PLC |
AAC TECHNOLOGHLDGADR and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and WPP PLC
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, WPP PLC 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 WPP PLC will offset losses from the drop in WPP PLC's long position.| AAC TECHNOLOGHLDGADR vs. ZTE Corporation | AAC TECHNOLOGHLDGADR vs. Superior Plus Corp | AAC TECHNOLOGHLDGADR vs. NMI Holdings | AAC TECHNOLOGHLDGADR vs. SIVERS SEMICONDUCTORS AB |
| WPP PLC vs. Sumitomo Rubber Industries | WPP PLC vs. Rayonier Advanced Materials | WPP PLC vs. Linedata Services SA | WPP PLC vs. Cass Information Systems |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |