Correlation Between Accton Technology and IBASE Technology

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

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

Diversification Opportunities for Accton Technology and IBASE Technology

0.27

Correlation Coefficient

Accton Technology  IBASE Technology

Modest diversification

The 3 months correlation between Accton and IBASE is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Accton Technology Corp and IBASE Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBASE Technology and Accton Technology 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 Accton Technology Corp are associated (or correlated) with IBASE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBASE Technology has no effect on the direction of Accton Technology i.e., Accton Technology and IBASE Technology go up and down completely randomly.

Pair Corralation between Accton Technology and IBASE Technology

Assuming the 90 days trading horizon Accton Technology Corp is expected to under-perform the IBASE Technology. In addition to that, Accton Technology is 1.42 times more volatile than IBASE Technology. It trades about -0.11 of its total potential returns per unit of risk. IBASE Technology is currently generating about -0.02 per unit of volatility. If you would invest  7,280  in IBASE Technology on December 28, 2024 and sell it today you would lose (200.00) from holding IBASE Technology or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Accton Technology Corp  vs.  IBASE Technology

Accton Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accton Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

IBASE Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days IBASE Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IBASE Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Accton Technology and IBASE Technology

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

The idea behind Accton Technology Corp and IBASE Technology 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..