Correlation Between Viavi Solutions and AAC Technologies
Can any of the company-specific risk be diversified away by investing in both Viavi Solutions 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 Viavi Solutions and AAC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viavi Solutions and AAC Technologies Holdings, you can compare the effects of market volatilities on Viavi Solutions 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 Viavi Solutions with a short position of AAC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viavi Solutions and AAC Technologies.
Diversification Opportunities for Viavi Solutions and AAC Technologies
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Viavi and AAC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Viavi Solutions 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 Viavi Solutions 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 Viavi Solutions 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 Viavi Solutions i.e., Viavi Solutions and AAC Technologies go up and down completely randomly.
Pair Corralation between Viavi Solutions and AAC Technologies
Given the investment horizon of 90 days Viavi Solutions is expected to generate 1.07 times less return on investment than AAC Technologies. But when comparing it to its historical volatility, Viavi Solutions is 1.51 times less risky than AAC Technologies. It trades about 0.13 of its potential returns per unit of risk. AAC Technologies Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 420.00 in AAC Technologies Holdings on August 29, 2024 and sell it today you would earn a total of 27.00 from holding AAC Technologies Holdings or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viavi Solutions vs. AAC Technologies Holdings
Performance |
| Timeline |
| Viavi Solutions |
| AAC Technologies Holdings |
Viavi Solutions and AAC Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viavi Solutions and AAC Technologies
The main advantage of trading using opposite Viavi Solutions and AAC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viavi Solutions 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.| Viavi Solutions vs. Ciena Corp | Viavi Solutions vs. Infinera | Viavi Solutions vs. Applied Opt | Viavi Solutions vs. Juniper Networks |
| AAC Technologies vs. Viavi Solutions | AAC Technologies vs. SatixFy Communications | AAC Technologies vs. Wialan Technologies | AAC Technologies vs. Electronic Systems Technology |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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