Correlation Between AAC Technologies and Frequency Electronics
Can any of the company-specific risk be diversified away by investing in both AAC Technologies and Frequency Electronics 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 Technologies and Frequency Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC Technologies Holdings and Frequency Electronics, you can compare the effects of market volatilities on AAC Technologies and Frequency Electronics 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 Technologies with a short position of Frequency Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Technologies and Frequency Electronics.
Diversification Opportunities for AAC Technologies and Frequency Electronics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and Frequency is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AAC Technologies Holdings and Frequency Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Electronics and AAC Technologies 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 Technologies Holdings are associated (or correlated) with Frequency Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Electronics has no effect on the direction of AAC Technologies i.e., AAC Technologies and Frequency Electronics go up and down completely randomly.
Pair Corralation between AAC Technologies and Frequency Electronics
Assuming the 90 days horizon AAC Technologies Holdings is expected to generate 1.06 times more return on investment than Frequency Electronics. However, AAC Technologies is 1.06 times more volatile than Frequency Electronics. It trades about 0.22 of its potential returns per unit of risk. Frequency Electronics is currently generating about -0.15 per unit of risk. If you would invest 459.00 in AAC Technologies Holdings on November 3, 2024 and sell it today you would earn a total of 63.00 from holding AAC Technologies Holdings or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC Technologies Holdings vs. Frequency Electronics
Performance |
| Timeline |
| AAC Technologies Holdings |
| Frequency Electronics |
AAC Technologies and Frequency Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC Technologies and Frequency Electronics
The main advantage of trading using opposite AAC Technologies and Frequency Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Technologies position performs unexpectedly, Frequency Electronics 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 Frequency Electronics will offset losses from the drop in Frequency Electronics' long position.| AAC Technologies vs. AmpliTech Group | AAC Technologies vs. AAP Inc | AAC Technologies vs. Airgain | AAC Technologies vs. Amplitech Group |
| Frequency Electronics vs. BK Technologies | Frequency Electronics vs. Actelis Networks | Frequency Electronics vs. Lantronix | Frequency Electronics vs. KVH Industries |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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