Correlation Between Optical Cable and AAC Technologies
Can any of the company-specific risk be diversified away by investing in both Optical Cable 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 Optical Cable and AAC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optical Cable and AAC Technologies Holdings, you can compare the effects of market volatilities on Optical Cable 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 Optical Cable with a short position of AAC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optical Cable and AAC Technologies.
Diversification Opportunities for Optical Cable and AAC Technologies
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optical and AAC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Optical Cable 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 Optical Cable 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 Optical Cable 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 Optical Cable i.e., Optical Cable and AAC Technologies go up and down completely randomly.
Pair Corralation between Optical Cable and AAC Technologies
Considering the 90-day investment horizon Optical Cable is expected to generate 25.58 times more return on investment than AAC Technologies. However, Optical Cable is 25.58 times more volatile than AAC Technologies Holdings. It trades about 0.08 of its potential returns per unit of risk. AAC Technologies Holdings is currently generating about 0.1 per unit of risk. If you would invest 286.00 in Optical Cable on September 2, 2024 and sell it today you would lose (53.00) from holding Optical Cable or give up 18.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optical Cable vs. AAC Technologies Holdings
Performance |
| Timeline |
| Optical Cable |
| AAC Technologies Holdings |
Optical Cable and AAC Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optical Cable and AAC Technologies
The main advantage of trading using opposite Optical Cable and AAC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optical Cable 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.| Optical Cable vs. KVH Industries | Optical Cable vs. Knowles Cor | Optical Cable vs. Comtech Telecommunications Corp | Optical Cable vs. Lantronix |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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