Correlation Between Advanced Braking and Accent
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Accent 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 Advanced Braking and Accent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and Accent Group, you can compare the effects of market volatilities on Advanced Braking and Accent 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 Advanced Braking with a short position of Accent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Accent.
Diversification Opportunities for Advanced Braking and Accent
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Accent is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Accent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accent Group and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Accent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accent Group has no effect on the direction of Advanced Braking i.e., Advanced Braking and Accent go up and down completely randomly.
Pair Corralation between Advanced Braking and Accent
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 0.99 times more return on investment than Accent. However, Advanced Braking Technology is 1.01 times less risky than Accent. It trades about 0.14 of its potential returns per unit of risk. Accent Group is currently generating about 0.09 per unit of risk. If you would invest 5.30 in Advanced Braking Technology on September 3, 2024 and sell it today you would earn a total of 2.80 from holding Advanced Braking Technology or generate 52.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Accent Group
Performance |
| Timeline |
| Advanced Braking Tec |
| Accent Group |
Advanced Braking and Accent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Accent
The main advantage of trading using opposite Advanced Braking and Accent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Accent 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 Accent will offset losses from the drop in Accent's long position.| Advanced Braking vs. Westpac Banking | Advanced Braking vs. Champion Iron | Advanced Braking vs. iShares Global Healthcare | Advanced Braking vs. Peel Mining |
| Accent vs. Advanced Braking Technology | Accent vs. RLF AgTech | Accent vs. Viva Leisure | Accent vs. Hutchison Telecommunications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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