Correlation Between ACM Research and Cloud Live

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

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

Diversification Opportunities for ACM Research and Cloud Live

0.38

Correlation Coefficient

ACM Research  Cloud Live

Weak diversification

The 3 months correlation between ACM and Cloud is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ACM Research Shanghai and Cloud Live Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Live Technology and ACM Research 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 ACM Research Shanghai are associated (or correlated) with Cloud Live. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Live Technology has no effect on the direction of ACM Research i.e., ACM Research and Cloud Live go up and down completely randomly.

Pair Corralation between ACM Research and Cloud Live

Assuming the 90 days trading horizon ACM Research Shanghai is expected to under-perform the Cloud Live. But the stock apears to be less risky and, when comparing its historical volatility, ACM Research Shanghai is 2.66 times less risky than Cloud Live. The stock trades about -0.01 of its potential returns per unit of risk. The Cloud Live Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  347.00  in Cloud Live Technology on December 23, 2024 and sell it today you would lose (7.00) from holding Cloud Live Technology or give up 2.02% of portfolio value over 90 days.

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

ACM Research Shanghai  vs.  Cloud Live Technology

ACM Research Shanghai

Risk-Adjusted Performance

Very Weak

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

Cloud Live Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cloud Live Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cloud Live is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ACM Research and Cloud Live

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

The idea behind ACM Research Shanghai and Cloud Live 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.