Correlation Between AAC TECHNOLOGHLDGADR and Relx PLC
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and Relx 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 Relx 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 Relx PLC ADR, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and Relx 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 Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Relx PLC.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and Relx PLC
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and Relx is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR 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 Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Relx PLC go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and Relx PLC
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 2.7 times more return on investment than Relx PLC. However, AAC TECHNOLOGHLDGADR is 2.7 times more volatile than Relx PLC ADR. It trades about 0.14 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.09 per unit of risk. If you would invest 284.00 in AAC TECHNOLOGHLDGADR on November 3, 2024 and sell it today you would earn a total of 190.00 from holding AAC TECHNOLOGHLDGADR or generate 66.9% 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. Relx PLC ADR
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| Relx PLC ADR |
AAC TECHNOLOGHLDGADR and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and Relx PLC
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, Relx 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| AAC TECHNOLOGHLDGADR vs. MARKET VECTR RETAIL | AAC TECHNOLOGHLDGADR vs. Caseys General Stores | AAC TECHNOLOGHLDGADR vs. National Retail Properties | AAC TECHNOLOGHLDGADR vs. Northern Data AG |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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