Correlation Between Accton Technology and SIM Technology

Can any of the company-specific risk be diversified away by investing in both Accton Technology and SIM 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 SIM 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 SIM Technology Group, you can compare the effects of market volatilities on Accton Technology and SIM 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 SIM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accton Technology and SIM Technology.

Diversification Opportunities for Accton Technology and SIM Technology

-0.24

Correlation Coefficient

Accton Technology  SIM Technology

Very good diversification

The 3 months correlation between Accton and SIM is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Accton Technology Corp and SIM Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIM Technology Group 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 SIM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIM Technology Group has no effect on the direction of Accton Technology i.e., Accton Technology and SIM Technology go up and down completely randomly.

Pair Corralation between Accton Technology and SIM Technology

Assuming the 90 days trading horizon Accton Technology Corp is expected to generate 1.87 times more return on investment than SIM Technology. However, Accton Technology is 1.87 times more volatile than SIM Technology Group. It trades about 0.18 of its potential returns per unit of risk. SIM Technology Group is currently generating about -0.06 per unit of risk. If you would invest  55,600  in Accton Technology Corp on October 13, 2024 and sell it today you would earn a total of  17,300  from holding Accton Technology Corp or generate 31.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Accton Technology Corp  vs.  SIM Technology Group

Accton Technology Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accton Technology Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Accton Technology showed solid returns over the last few months and may actually be approaching a breakup point.

SIM Technology Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIM Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIM Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Accton Technology and SIM Technology

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

The idea behind Accton Technology Corp and SIM Technology Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.