Correlation Between AAC TECHNOLOGHLDGADR and North American
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and North American 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 North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and North American Construction, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and North American.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and North American
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and North is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and North American go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and North American
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.64 times more return on investment than North American. However, AAC TECHNOLOGHLDGADR is 1.64 times more volatile than North American Construction. It trades about 0.09 of its potential returns per unit of risk. North American Construction is currently generating about 0.04 per unit of risk. If you would invest 215.00 in AAC TECHNOLOGHLDGADR on September 14, 2024 and sell it today you would earn a total of 245.00 from holding AAC TECHNOLOGHLDGADR or generate 113.95% 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. North American Construction
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| North American Const |
AAC TECHNOLOGHLDGADR and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and North American
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| AAC TECHNOLOGHLDGADR vs. Cisco Systems | AAC TECHNOLOGHLDGADR vs. Nokia | AAC TECHNOLOGHLDGADR vs. Superior Plus Corp | AAC TECHNOLOGHLDGADR vs. SIVERS SEMICONDUCTORS AB |
| North American vs. Tenaris SA | North American vs. NOV Inc | North American vs. Superior Plus Corp | North American vs. SIVERS SEMICONDUCTORS AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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