Correlation Between AAC TECHNOLOGHLDGADR and Sims Metal
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and Sims Metal 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 Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and Sims Metal Management, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Sims Metal.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and Sims Metal
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AAC and Sims is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Sims Metal go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and Sims Metal
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.61 times more return on investment than Sims Metal. However, AAC TECHNOLOGHLDGADR is 1.61 times more volatile than Sims Metal Management. It trades about 0.11 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.09 per unit of risk. If you would invest 270.00 in AAC TECHNOLOGHLDGADR on September 2, 2024 and sell it today you would earn a total of 140.00 from holding AAC TECHNOLOGHLDGADR or generate 51.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. Sims Metal Management
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| Sims Metal Management |
AAC TECHNOLOGHLDGADR and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and Sims Metal
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| AAC TECHNOLOGHLDGADR vs. Charter Communications | AAC TECHNOLOGHLDGADR vs. MeVis Medical Solutions | AAC TECHNOLOGHLDGADR vs. MEDICAL FACILITIES NEW | AAC TECHNOLOGHLDGADR vs. Iridium Communications |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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