Correlation Between AAC TECHNOLOGHLDGADR and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and FARO 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 AAC TECHNOLOGHLDGADR and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and FARO Technologies, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and FARO 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 AAC TECHNOLOGHLDGADR with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and FARO Technologies.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and FARO Technologies
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between AAC and FARO is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies 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 FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and FARO Technologies go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and FARO Technologies
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 0.96 times more return on investment than FARO Technologies. However, AAC TECHNOLOGHLDGADR is 1.04 times less risky than FARO Technologies. It trades about 0.1 of its potential returns per unit of risk. FARO Technologies is currently generating about 0.05 per unit of risk. If you would invest 482.00 in AAC TECHNOLOGHLDGADR on December 26, 2024 and sell it today you would earn a total of 108.00 from holding AAC TECHNOLOGHLDGADR or generate 22.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. FARO Technologies
Performance |
Timeline |
AAC TECHNOLOGHLDGADR |
FARO Technologies |
AAC TECHNOLOGHLDGADR and FARO Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and FARO Technologies
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, FARO 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.AAC TECHNOLOGHLDGADR vs. SBI Insurance Group | AAC TECHNOLOGHLDGADR vs. Singapore Reinsurance | AAC TECHNOLOGHLDGADR vs. Sabre Insurance Group | AAC TECHNOLOGHLDGADR vs. Vienna Insurance Group |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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