Correlation Between Acco Brands and NetEase
Can any of the company-specific risk be diversified away by investing in both Acco Brands and NetEase 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 Acco Brands and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and NetEase, you can compare the effects of market volatilities on Acco Brands and NetEase 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 Acco Brands with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and NetEase.
Diversification Opportunities for Acco Brands and NetEase
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Acco and NetEase is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and Acco Brands 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 Acco Brands are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Acco Brands i.e., Acco Brands and NetEase go up and down completely randomly.
Pair Corralation between Acco Brands and NetEase
Given the investment horizon of 90 days Acco Brands is expected to generate 0.74 times more return on investment than NetEase. However, Acco Brands is 1.35 times less risky than NetEase. It trades about 0.1 of its potential returns per unit of risk. NetEase is currently generating about 0.05 per unit of risk. If you would invest 529.00 in Acco Brands on August 28, 2024 and sell it today you would earn a total of 67.00 from holding Acco Brands or generate 12.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. NetEase
Performance |
| Timeline |
| Acco Brands |
| NetEase |
Acco Brands and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and NetEase
The main advantage of trading using opposite Acco Brands and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.| Acco Brands vs. Park Electrochemical | Acco Brands vs. Innovative Solutions and | Acco Brands vs. Curtiss Wright | Acco Brands vs. National Presto Industries |
| NetEase vs. Playstudios | NetEase vs. Talkspace | NetEase vs. Katapult Holdings Equity | NetEase vs. Aquagold International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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