Correlation Between Acuity Brands and Asia Pacific
Can any of the company-specific risk be diversified away by investing in both Acuity Brands and Asia Pacific 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 Acuity Brands and Asia Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acuity Brands and Asia Pacific Wire, you can compare the effects of market volatilities on Acuity Brands and Asia Pacific 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 Acuity Brands with a short position of Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acuity Brands and Asia Pacific.
Diversification Opportunities for Acuity Brands and Asia Pacific
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acuity and Asia is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Acuity Brands and Asia Pacific Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Wire and Acuity 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 Acuity Brands are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Wire has no effect on the direction of Acuity Brands i.e., Acuity Brands and Asia Pacific go up and down completely randomly.
Pair Corralation between Acuity Brands and Asia Pacific
Considering the 90-day investment horizon Acuity Brands is expected to generate 3.39 times less return on investment than Asia Pacific. But when comparing it to its historical volatility, Acuity Brands is 2.29 times less risky than Asia Pacific. It trades about 0.3 of its potential returns per unit of risk. Asia Pacific Wire is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 155.00 in Asia Pacific Wire on August 27, 2024 and sell it today you would earn a total of 44.00 from holding Asia Pacific Wire or generate 28.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acuity Brands vs. Asia Pacific Wire
Performance |
| Timeline |
| Acuity Brands |
| Asia Pacific Wire |
Acuity Brands and Asia Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acuity Brands and Asia Pacific
The main advantage of trading using opposite Acuity Brands and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acuity Brands position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific's long position.| Acuity Brands vs. Bloom Energy Corp | Acuity Brands vs. Eos Energy Enterprises | Acuity Brands vs. Sunrise New Energy | Acuity Brands vs. Flux Power Holdings |
| Asia Pacific vs. Tantalus Systems Holding | Asia Pacific vs. Hydrogen Engine Center | Asia Pacific vs. Alfen NV | Asia Pacific vs. Legrand SA ADR |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |