Correlation Between Choil Aluminum and Access Bio

Can any of the company-specific risk be diversified away by investing in both Choil Aluminum and Access Bio 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 Choil Aluminum and Access Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Choil Aluminum and Access Bio, you can compare the effects of market volatilities on Choil Aluminum and Access Bio 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 Choil Aluminum with a short position of Access Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choil Aluminum and Access Bio.

Diversification Opportunities for Choil Aluminum and Access Bio

0.91

Correlation Coefficient

Choil Aluminum  Access Bio

Almost no diversification

The 3 months correlation between Choil and Access is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Choil Aluminum and Access Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Access Bio and Choil Aluminum 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 Choil Aluminum are associated (or correlated) with Access Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Access Bio has no effect on the direction of Choil Aluminum i.e., Choil Aluminum and Access Bio go up and down completely randomly.

Pair Corralation between Choil Aluminum and Access Bio

Assuming the 90 days trading horizon Choil Aluminum is expected to under-perform the Access Bio. In addition to that, Choil Aluminum is 1.0 times more volatile than Access Bio. It trades about -0.11 of its total potential returns per unit of risk. Access Bio is currently generating about -0.07 per unit of volatility. If you would invest  612,000  in Access Bio on October 6, 2024 and sell it today you would lose (61,000) from holding Access Bio or give up 9.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Choil Aluminum  vs.  Access Bio

Choil Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choil Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Access Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Access Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Choil Aluminum and Access Bio

The main advantage of trading using opposite Choil Aluminum and Access Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choil Aluminum position performs unexpectedly, Access Bio 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 Access Bio will offset losses from the drop in Access Bio's long position.

The idea behind Choil Aluminum and Access Bio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.