Correlation Between Frequency Electronics and AAC Technologies
Can any of the company-specific risk be diversified away by investing in both Frequency Electronics and AAC Technologies 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 Frequency Electronics and AAC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frequency Electronics and AAC Technologies Holdings, you can compare the effects of market volatilities on Frequency Electronics and AAC Technologies 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 Frequency Electronics with a short position of AAC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frequency Electronics and AAC Technologies.
Diversification Opportunities for Frequency Electronics and AAC Technologies
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Frequency and AAC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and AAC Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Technologies Holdings and Frequency Electronics 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 Frequency Electronics are associated (or correlated) with AAC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Technologies Holdings has no effect on the direction of Frequency Electronics i.e., Frequency Electronics and AAC Technologies go up and down completely randomly.
Pair Corralation between Frequency Electronics and AAC Technologies
Given the investment horizon of 90 days Frequency Electronics is expected to under-perform the AAC Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Frequency Electronics is 1.06 times less risky than AAC Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The AAC Technologies Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 459.00 in AAC Technologies Holdings on November 3, 2024 and sell it today you would earn a total of 63.00 from holding AAC Technologies Holdings or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frequency Electronics vs. AAC Technologies Holdings
Performance |
| Timeline |
| Frequency Electronics |
| AAC Technologies Holdings |
Frequency Electronics and AAC Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frequency Electronics and AAC Technologies
The main advantage of trading using opposite Frequency Electronics and AAC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frequency Electronics position performs unexpectedly, AAC Technologies 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 Technologies will offset losses from the drop in AAC Technologies' long position.| Frequency Electronics vs. BK Technologies | Frequency Electronics vs. Actelis Networks | Frequency Electronics vs. Lantronix | Frequency Electronics vs. KVH Industries |
| AAC Technologies vs. AmpliTech Group | AAC Technologies vs. AAP Inc | AAC Technologies vs. Airgain | AAC Technologies vs. Amplitech Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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