Correlation Between AAC TECHNOLOGHLDGADR and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and GOLD ROAD 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 GOLD ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and GOLD ROAD RES, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and GOLD ROAD.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and GOLD ROAD
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and GOLD is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and GOLD ROAD go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and GOLD ROAD
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.93 times more return on investment than GOLD ROAD. However, AAC TECHNOLOGHLDGADR is 1.93 times more volatile than GOLD ROAD RES. It trades about 0.1 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.13 per unit of risk. If you would invest 356.00 in AAC TECHNOLOGHLDGADR on September 3, 2024 and sell it today you would earn a total of 54.00 from holding AAC TECHNOLOGHLDGADR or generate 15.17% 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. GOLD ROAD RES
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| GOLD ROAD RES |
AAC TECHNOLOGHLDGADR and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and GOLD ROAD
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| AAC TECHNOLOGHLDGADR vs. Cisco Systems | AAC TECHNOLOGHLDGADR vs. Cisco Systems | AAC TECHNOLOGHLDGADR vs. Motorola Solutions | AAC TECHNOLOGHLDGADR vs. Nokia |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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