Correlation Between AAC TECHNOLOGHLDGADR and ADYEN NV

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Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and ADYEN NV 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 AAC TECHNOLOGHLDGADR and ADYEN NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and ADYEN NV UNSPADR001, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and ADYEN NV 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 AAC TECHNOLOGHLDGADR with a short position of ADYEN NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and ADYEN NV.

Diversification Opportunities for AAC TECHNOLOGHLDGADR and ADYEN NV

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between AAC and ADYEN is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and ADYEN NV UNSPADR001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADYEN NV UNSPADR001 and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR are associated (or correlated) with ADYEN NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADYEN NV UNSPADR001 has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and ADYEN NV go up and down completely randomly.

Pair Corralation between AAC TECHNOLOGHLDGADR and ADYEN NV

Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.12 times more return on investment than ADYEN NV. However, AAC TECHNOLOGHLDGADR is 1.12 times more volatile than ADYEN NV UNSPADR001. It trades about 0.07 of its potential returns per unit of risk. ADYEN NV UNSPADR001 is currently generating about 0.04 per unit of risk. If you would invest  269.00  in AAC TECHNOLOGHLDGADR on September 14, 2024 and sell it today you would earn a total of  191.00  from holding AAC TECHNOLOGHLDGADR or generate 71.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AAC TECHNOLOGHLDGADR  vs.  ADYEN NV UNSPADR001

 Performance 
       Timeline  
AAC TECHNOLOGHLDGADR 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.
ADYEN NV UNSPADR001 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ADYEN NV UNSPADR001 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ADYEN NV reported solid returns over the last few months and may actually be approaching a breakup point.

AAC TECHNOLOGHLDGADR and ADYEN NV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AAC TECHNOLOGHLDGADR and ADYEN NV

The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and ADYEN NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, ADYEN NV 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 ADYEN NV will offset losses from the drop in ADYEN NV's long position.
The idea behind AAC TECHNOLOGHLDGADR and ADYEN NV UNSPADR001 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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