Correlation Between ACM Research and Linktel Technologies

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

Diversification Opportunities for ACM Research and Linktel Technologies

0.72

Correlation Coefficient

ACM Research  Linktel Technologies

Poor diversification

The 3 months correlation between ACM and Linktel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ACM Research Shanghai and Linktel Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linktel Technologies 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 Linktel Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linktel Technologies has no effect on the direction of ACM Research i.e., ACM Research and Linktel Technologies go up and down completely randomly.

Pair Corralation between ACM Research and Linktel Technologies

Assuming the 90 days trading horizon ACM Research is expected to generate 4.3 times less return on investment than Linktel Technologies. But when comparing it to its historical volatility, ACM Research Shanghai is 1.82 times less risky than Linktel Technologies. It trades about 0.03 of its potential returns per unit of risk. Linktel Technologies Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,203  in Linktel Technologies Co on September 28, 2024 and sell it today you would earn a total of  5,807  from holding Linktel Technologies Co or generate 263.6% return on investment over 90 days.

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

ACM Research Shanghai  vs.  Linktel Technologies Co

ACM Research Shanghai

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ACM Research Shanghai are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Linktel Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Linktel Technologies Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Linktel Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACM Research and Linktel Technologies

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

The idea behind ACM Research Shanghai and Linktel Technologies Co 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.