Correlation Between AAC TECHNOLOGHLDGADR and RTL GROUP

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

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

Diversification Opportunities for AAC TECHNOLOGHLDGADR and RTL GROUP

-0.21

Correlation Coefficient

AAC TECHNOLOGHLDGADR  RTL GROUP

Very good diversification

The 3 months correlation between AAC and RTL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and RTL GROUP UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL GROUP UNSPADR 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 RTL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL GROUP UNSPADR has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and RTL GROUP go up and down completely randomly.

Pair Corralation between AAC TECHNOLOGHLDGADR and RTL GROUP

Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.06 times more return on investment than RTL GROUP. However, AAC TECHNOLOGHLDGADR is 1.06 times more volatile than RTL GROUP UNSPADR. It trades about 0.14 of its potential returns per unit of risk. RTL GROUP UNSPADR is currently generating about -0.03 per unit of risk. If you would invest  374.00  in AAC TECHNOLOGHLDGADR on October 26, 2024 and sell it today you would earn a total of  96.00  from holding AAC TECHNOLOGHLDGADR or generate 25.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

AAC TECHNOLOGHLDGADR  vs.  RTL GROUP UNSPADR

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 10 (%) 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.

RTL GROUP UNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL GROUP UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 RTL GROUP

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

The idea behind AAC TECHNOLOGHLDGADR and RTL GROUP UNSPADR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.