Correlation Between ADS TEC and Acuity Brands
Can any of the company-specific risk be diversified away by investing in both ADS TEC and Acuity Brands 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 ADS TEC and Acuity Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADS TEC ENERGY PLC and Acuity Brands, you can compare the effects of market volatilities on ADS TEC and Acuity Brands 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 ADS TEC with a short position of Acuity Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADS TEC and Acuity Brands.
Diversification Opportunities for ADS TEC and Acuity Brands
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ADS and Acuity is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ADS TEC ENERGY PLC and Acuity Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuity Brands and ADS TEC 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 ADS TEC ENERGY PLC are associated (or correlated) with Acuity Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acuity Brands has no effect on the direction of ADS TEC i.e., ADS TEC and Acuity Brands go up and down completely randomly.
Pair Corralation between ADS TEC and Acuity Brands
Assuming the 90 days horizon ADS TEC ENERGY PLC is expected to under-perform the Acuity Brands. In addition to that, ADS TEC is 3.19 times more volatile than Acuity Brands. It trades about -0.1 of its total potential returns per unit of risk. Acuity Brands is currently generating about 0.25 per unit of volatility. If you would invest 30,602 in Acuity Brands on August 27, 2024 and sell it today you would earn a total of 2,022 from holding Acuity Brands or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADS TEC ENERGY PLC vs. Acuity Brands
Performance |
| Timeline |
| ADS TEC ENERGY |
| Acuity Brands |
ADS TEC and Acuity Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADS TEC and Acuity Brands
The main advantage of trading using opposite ADS TEC and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADS TEC position performs unexpectedly, Acuity Brands 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 Acuity Brands will offset losses from the drop in Acuity Brands' long position.| ADS TEC vs. FREYR Battery SA | ADS TEC vs. Microvast Holdings | ADS TEC vs. Chardan NexTech Acquisition | ADS TEC vs. Solid Power |
| Acuity Brands vs. Bloom Energy Corp | Acuity Brands vs. Eos Energy Enterprises | Acuity Brands vs. Sunrise New Energy | Acuity Brands vs. Flux Power Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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