Correlation Between Acme United and Armada Acquisition
Can any of the company-specific risk be diversified away by investing in both Acme United and Armada Acquisition 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 Acme United and Armada Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Armada Acquisition Corp, you can compare the effects of market volatilities on Acme United and Armada Acquisition 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 Acme United with a short position of Armada Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Armada Acquisition.
Diversification Opportunities for Acme United and Armada Acquisition
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Acme and Armada is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Armada Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Acquisition Corp and Acme United 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 Acme United are associated (or correlated) with Armada Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Acquisition Corp has no effect on the direction of Acme United i.e., Acme United and Armada Acquisition go up and down completely randomly.
Pair Corralation between Acme United and Armada Acquisition
Considering the 90-day investment horizon Acme United is expected to generate 0.61 times more return on investment than Armada Acquisition. However, Acme United is 1.64 times less risky than Armada Acquisition. It trades about 0.06 of its potential returns per unit of risk. Armada Acquisition Corp is currently generating about -0.04 per unit of risk. If you would invest 2,303 in Acme United on August 30, 2024 and sell it today you would earn a total of 2,132 from holding Acme United or generate 92.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.46% |
| Values | Daily Returns |
Acme United vs. Armada Acquisition Corp
Performance |
| Timeline |
| Acme United |
| Armada Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Acme United and Armada Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Armada Acquisition
The main advantage of trading using opposite Acme United and Armada Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Armada Acquisition 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 Armada Acquisition will offset losses from the drop in Armada Acquisition's long position.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
| Armada Acquisition vs. Church Dwight | Armada Acquisition vs. CVR Partners LP | Armada Acquisition vs. Acme United | Armada Acquisition vs. Albemarle |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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