Correlation Between AAC TECHNOLOGHLDGADR and SBI Holdings

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

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

Diversification Opportunities for AAC TECHNOLOGHLDGADR and SBI Holdings

0.73

Correlation Coefficient

AAC TECHNOLOGHLDGADR  SBI Holdings

Poor diversification

The 3 months correlation between AAC and SBI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and SBI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Holdings 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 SBI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Holdings has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and SBI Holdings go up and down completely randomly.

Pair Corralation between AAC TECHNOLOGHLDGADR and SBI Holdings

Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.98 times more return on investment than SBI Holdings. However, AAC TECHNOLOGHLDGADR is 1.98 times more volatile than SBI Holdings. It trades about 0.07 of its potential returns per unit of risk. SBI Holdings is currently generating about -0.04 per unit of risk. If you would invest  444.00  in AAC TECHNOLOGHLDGADR on October 10, 2024 and sell it today you would earn a total of  14.00  from holding AAC TECHNOLOGHLDGADR or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

AAC TECHNOLOGHLDGADR  vs.  SBI Holdings

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

11 of 100

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 uncertain basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

SBI Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAC TECHNOLOGHLDGADR and SBI Holdings

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

The idea behind AAC TECHNOLOGHLDGADR and SBI Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.