Correlation Between AAC TECHNOLOGHLDGADR and INFORMATION SVC
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and INFORMATION SVC 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 INFORMATION SVC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and INFORMATION SVC GRP, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and INFORMATION SVC.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and INFORMATION SVC
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and INFORMATION is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and INFORMATION SVC go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and INFORMATION SVC
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.56 times more return on investment than INFORMATION SVC. However, AAC TECHNOLOGHLDGADR is 1.56 times more volatile than INFORMATION SVC GRP. It trades about 0.08 of its potential returns per unit of risk. INFORMATION SVC GRP is currently generating about -0.02 per unit of risk. If you would invest 183.00 in AAC TECHNOLOGHLDGADR on September 1, 2024 and sell it today you would earn a total of 223.00 from holding AAC TECHNOLOGHLDGADR or generate 121.86% 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. INFORMATION SVC GRP
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| INFORMATION SVC GRP |
AAC TECHNOLOGHLDGADR and INFORMATION SVC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and INFORMATION SVC
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and INFORMATION SVC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, INFORMATION SVC 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 INFORMATION SVC will offset losses from the drop in INFORMATION SVC's long position.| AAC TECHNOLOGHLDGADR vs. Motorola Solutions | AAC TECHNOLOGHLDGADR vs. Nokia | AAC TECHNOLOGHLDGADR vs. ZTE Corporation | AAC TECHNOLOGHLDGADR vs. Hewlett Packard Enterprise |
| INFORMATION SVC vs. Alfa Financial Software | INFORMATION SVC vs. Meli Hotels International | INFORMATION SVC vs. MIRAMAR HOTEL INV | INFORMATION SVC vs. Hyatt Hotels |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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