Correlation Between Allegheny Technologies and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and AAC TECHNOLOGHLDGADR 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 Allegheny Technologies and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on Allegheny Technologies and AAC TECHNOLOGHLDGADR 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 Allegheny Technologies with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for Allegheny Technologies and AAC TECHNOLOGHLDGADR
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Allegheny and AAC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and Allegheny 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 Allegheny Technologies Incorporated are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between Allegheny Technologies and AAC TECHNOLOGHLDGADR
Assuming the 90 days trading horizon Allegheny Technologies is expected to generate 44.58 times less return on investment than AAC TECHNOLOGHLDGADR. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 1.67 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.01 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 284.00 in AAC TECHNOLOGHLDGADR on November 3, 2024 and sell it today you would earn a total of 190.00 from holding AAC TECHNOLOGHLDGADR or generate 66.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| Allegheny Technologies |
| AAC TECHNOLOGHLDGADR |
Allegheny Technologies and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite Allegheny Technologies and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc | Allegheny Technologies vs. Apple Inc |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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