Correlation Between AAC TECHNOLOGHLDGADR and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and Adtalem Global 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 Adtalem Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and Adtalem Global Education, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and Adtalem Global 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 Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Adtalem Global.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and Adtalem Global
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and Adtalem is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Adtalem Global go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and Adtalem Global
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 10.14 times less return on investment than Adtalem Global. In addition to that, AAC TECHNOLOGHLDGADR is 1.35 times more volatile than Adtalem Global Education. It trades about 0.02 of its total potential returns per unit of risk. Adtalem Global Education is currently generating about 0.28 per unit of volatility. If you would invest 9,150 in Adtalem Global Education on November 5, 2024 and sell it today you would earn a total of 1,050 from holding Adtalem Global Education or generate 11.48% 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. Adtalem Global Education
Performance |
Timeline |
AAC TECHNOLOGHLDGADR |
Adtalem Global Education |
AAC TECHNOLOGHLDGADR and Adtalem Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and Adtalem Global
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.AAC TECHNOLOGHLDGADR vs. ADDUS HOMECARE | AAC TECHNOLOGHLDGADR vs. OFFICE DEPOT | AAC TECHNOLOGHLDGADR vs. The Home Depot | AAC TECHNOLOGHLDGADR vs. North American Construction |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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