Correlation Between AAC TECHNOLOGHLDGADR and Mitsubishi Logistics

Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and Mitsubishi Logistics 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 Mitsubishi Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and Mitsubishi Logistics, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and Mitsubishi Logistics 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 Mitsubishi Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Mitsubishi Logistics.

Diversification Opportunities for AAC TECHNOLOGHLDGADR and Mitsubishi Logistics

-0.78

Correlation Coefficient

AAC TECHNOLOGHLDGADR  Mitsubishi Logistics

Pay attention - limited upside

The 3 months correlation between AAC and Mitsubishi is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Mitsubishi Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Logistics 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 Mitsubishi Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Logistics has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Mitsubishi Logistics go up and down completely randomly.

Pair Corralation between AAC TECHNOLOGHLDGADR and Mitsubishi Logistics

Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.57 times more return on investment than Mitsubishi Logistics. However, AAC TECHNOLOGHLDGADR is 1.57 times more volatile than Mitsubishi Logistics. It trades about 0.15 of its potential returns per unit of risk. Mitsubishi Logistics is currently generating about -0.06 per unit of risk. If you would invest  446.00  in AAC TECHNOLOGHLDGADR on December 22, 2024 and sell it today you would earn a total of  169.00  from holding AAC TECHNOLOGHLDGADR or generate 37.89% return on investment over 90 days.

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

AAC TECHNOLOGHLDGADR  vs.  Mitsubishi Logistics

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 11 (%) 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.

Mitsubishi Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mitsubishi Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AAC TECHNOLOGHLDGADR and Mitsubishi Logistics

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

The idea behind AAC TECHNOLOGHLDGADR and Mitsubishi Logistics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.