Correlation Between Accelleron Industries and Spotify Technology

Can any of the company-specific risk be diversified away by investing in both Accelleron Industries and Spotify Technology 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 Accelleron Industries and Spotify Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accelleron Industries AG and Spotify Technology SA, you can compare the effects of market volatilities on Accelleron Industries and Spotify Technology 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 Accelleron Industries with a short position of Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accelleron Industries and Spotify Technology.

Diversification Opportunities for Accelleron Industries and Spotify Technology

0.49

Correlation Coefficient

Accelleron Industries  Spotify Technology

Very weak diversification

The 3 months correlation between Accelleron and Spotify is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Accelleron Industries AG and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology and Accelleron Industries 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 Accelleron Industries AG are associated (or correlated) with Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Accelleron Industries i.e., Accelleron Industries and Spotify Technology go up and down completely randomly.

Pair Corralation between Accelleron Industries and Spotify Technology

Assuming the 90 days trading horizon Accelleron Industries AG is expected to under-perform the Spotify Technology. But the stock apears to be less risky and, when comparing its historical volatility, Accelleron Industries AG is 1.55 times less risky than Spotify Technology. The stock trades about -0.25 of its potential returns per unit of risk. The Spotify Technology SA is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  46,415  in Spotify Technology SA on October 10, 2024 and sell it today you would lose (2,090) from holding Spotify Technology SA or give up 4.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.0%
Values	Daily Returns

Accelleron Industries AG  vs.  Spotify Technology SA

Accelleron Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Accelleron Industries AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Accelleron Industries is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Spotify Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Accelleron Industries and Spotify Technology

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

The idea behind Accelleron Industries AG and Spotify Technology SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.