Correlation Between AAC Technologies and Viavi Solutions
Can any of the company-specific risk be diversified away by investing in both AAC Technologies and Viavi Solutions 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 Viavi Solutions 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 Viavi Solutions, you can compare the effects of market volatilities on AAC Technologies and Viavi Solutions 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 Viavi Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Technologies and Viavi Solutions.
Diversification Opportunities for AAC Technologies and Viavi Solutions
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AAC and Viavi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AAC Technologies Holdings and Viavi Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viavi Solutions 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 Viavi Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viavi Solutions has no effect on the direction of AAC Technologies i.e., AAC Technologies and Viavi Solutions go up and down completely randomly.
Pair Corralation between AAC Technologies and Viavi Solutions
Assuming the 90 days horizon AAC Technologies Holdings is expected to generate 0.66 times more return on investment than Viavi Solutions. However, AAC Technologies Holdings is 1.51 times less risky than Viavi Solutions. It trades about 0.33 of its potential returns per unit of risk. Viavi Solutions is currently generating about 0.17 per unit of risk. If you would invest 497.00 in AAC Technologies Holdings on November 28, 2024 and sell it today you would earn a total of 114.00 from holding AAC Technologies Holdings or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC Technologies Holdings vs. Viavi Solutions
Performance |
| Timeline |
| AAC Technologies Holdings |
| Viavi Solutions |
AAC Technologies and Viavi Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC Technologies and Viavi Solutions
The main advantage of trading using opposite AAC Technologies and Viavi Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Technologies position performs unexpectedly, Viavi Solutions 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 Viavi Solutions will offset losses from the drop in Viavi Solutions' long position.| AAC Technologies vs. AmpliTech Group | AAC Technologies vs. AAP Inc | AAC Technologies vs. Airgain | AAC Technologies vs. Amplitech Group |
| Viavi Solutions vs. Ciena Corp | Viavi Solutions vs. Infinera | Viavi Solutions vs. Applied Opt | Viavi Solutions vs. Juniper Networks |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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