Correlation Between Accent Resources and Power Integrations

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

By analyzing existing cross correlation between Accent Resources NL and Power Integrations, you can compare the effects of market volatilities on Accent Resources and Power Integrations 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 Accent Resources with a short position of Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accent Resources and Power Integrations.

Diversification Opportunities for Accent Resources and Power Integrations

0.62

Correlation Coefficient

Accent Resources  Power Integrations

Poor diversification

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

Pair Corralation between Accent Resources and Power Integrations

Assuming the 90 days horizon Accent Resources NL is expected to under-perform the Power Integrations. In addition to that, Accent Resources is 4.67 times more volatile than Power Integrations. It trades about -0.01 of its total potential returns per unit of risk. Power Integrations is currently generating about 0.03 per unit of volatility. If you would invest  5,731  in Power Integrations on October 23, 2024 and sell it today you would earn a total of  169.00  from holding Power Integrations or generate 2.95% return on investment over 90 days.

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

Accent Resources NL  vs.  Power Integrations

Accent Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accent Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Accent Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Integrations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Integrations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Power Integrations is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Accent Resources and Power Integrations

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

The idea behind Accent Resources NL and Power Integrations 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.