Correlation Between HTC Corp and Acer

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

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

Diversification Opportunities for HTC Corp and Acer

0.62

Correlation Coefficient

HTC Corp  Acer

Poor diversification

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

Pair Corralation between HTC Corp and Acer

Assuming the 90 days trading horizon HTC Corp is expected to under-perform the Acer. In addition to that, HTC Corp is 1.74 times more volatile than Acer Inc. It trades about -0.05 of its total potential returns per unit of risk. Acer Inc is currently generating about 0.02 per unit of volatility. If you would invest  3,705  in Acer Inc on September 23, 2024 and sell it today you would earn a total of  15.00  from holding Acer Inc or generate 0.4% return on investment over 90 days.

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

HTC Corp  vs.  Acer Inc

HTC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with HTC Corp and Acer

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

The idea behind HTC Corp and Acer Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.