Correlation Between Ross Stores and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for Ross Stores and AAC TECHNOLOGHLDGADR
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ross and AAC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between Ross Stores and AAC TECHNOLOGHLDGADR
Assuming the 90 days trading horizon Ross Stores is expected to generate 2.3 times less return on investment than AAC TECHNOLOGHLDGADR. But when comparing it to its historical volatility, Ross Stores is 1.71 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.13 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 372.00 in AAC TECHNOLOGHLDGADR on October 11, 2024 and sell it today you would earn a total of 88.00 from holding AAC TECHNOLOGHLDGADR or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.44% |
| Values | Daily Returns |
Ross Stores vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| Ross Stores |
| AAC TECHNOLOGHLDGADR |
Ross Stores and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite Ross Stores and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. MOVIE GAMES SA | Ross Stores vs. GigaMedia | Ross Stores vs. PLAYMATES TOYS | Ross Stores vs. Penn National Gaming |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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