Correlation Between NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID 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 NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on NEWELL RUBBERMAID 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 NEWELL RUBBERMAID with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NEWELL and AAC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID 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 NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 0.41 times more return on investment than AAC TECHNOLOGHLDGADR. However, NEWELL RUBBERMAID is 2.42 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.06 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about -0.05 per unit of risk. If you would invest 969.00 in NEWELL RUBBERMAID on October 20, 2024 and sell it today you would earn a total of 12.00 from holding NEWELL RUBBERMAID or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| AAC TECHNOLOGHLDGADR |
NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite NEWELL RUBBERMAID and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID 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.| NEWELL RUBBERMAID vs. Hua Hong Semiconductor | NEWELL RUBBERMAID vs. Taiwan Semiconductor Manufacturing | NEWELL RUBBERMAID vs. Magnachip Semiconductor | NEWELL RUBBERMAID vs. BOSTON BEER A |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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