Correlation Between Accton Technology and CTCI Corp

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

Diversification Opportunities for Accton Technology and CTCI Corp

-0.62

Correlation Coefficient

Accton Technology  CTCI Corp

Excellent diversification

The 3 months correlation between Accton and CTCI is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Accton Technology Corp and CTCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTCI Corp 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 CTCI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTCI Corp has no effect on the direction of Accton Technology i.e., Accton Technology and CTCI Corp go up and down completely randomly.

Pair Corralation between Accton Technology and CTCI Corp

Assuming the 90 days trading horizon Accton Technology Corp is expected to under-perform the CTCI Corp. In addition to that, Accton Technology is 3.14 times more volatile than CTCI Corp. It trades about -0.02 of its total potential returns per unit of risk. CTCI Corp is currently generating about 0.07 per unit of volatility. If you would invest  4,095  in CTCI Corp on December 1, 2024 and sell it today you would earn a total of  125.00  from holding CTCI Corp or generate 3.05% return on investment over 90 days.

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

Accton Technology Corp  vs.  CTCI Corp

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 fairly stable basic indicators, Accton Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CTCI Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTCI Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CTCI Corp 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 CTCI Corp

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

The idea behind Accton Technology Corp and CTCI Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.