Correlation Between AAC TECHNOLOGHLDGADR and Molson Coors

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

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

Diversification Opportunities for AAC TECHNOLOGHLDGADR and Molson Coors

0.56

Correlation Coefficient

AAC TECHNOLOGHLDGADR  Molson Coors

Very weak diversification

The 3 months correlation between AAC and Molson is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Molson Coors go up and down completely randomly.

Pair Corralation between AAC TECHNOLOGHLDGADR and Molson Coors

Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 2.15 times more return on investment than Molson Coors. However, AAC TECHNOLOGHLDGADR is 2.15 times more volatile than Molson Coors Brewing. It trades about 0.06 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.04 per unit of risk. If you would invest  239.00  in AAC TECHNOLOGHLDGADR on October 11, 2024 and sell it today you would earn a total of  225.00  from holding AAC TECHNOLOGHLDGADR or generate 94.14% return on investment over 90 days.

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

AAC TECHNOLOGHLDGADR  vs.  Molson Coors Brewing

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Brewing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AAC TECHNOLOGHLDGADR and Molson Coors

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

The idea behind AAC TECHNOLOGHLDGADR and Molson Coors Brewing 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.