Correlation Between American Homes and ACCSYS TECHPLC

Can any of the company-specific risk be diversified away by investing in both American Homes and ACCSYS TECHPLC 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 American Homes and ACCSYS TECHPLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Homes 4 and ACCSYS TECHPLC EO, you can compare the effects of market volatilities on American Homes and ACCSYS TECHPLC 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 American Homes with a short position of ACCSYS TECHPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and ACCSYS TECHPLC.

Diversification Opportunities for American Homes and ACCSYS TECHPLC

0.49

Correlation Coefficient

American Homes  ACCSYS TECHPLC

Very weak diversification

The 3 months correlation between American and ACCSYS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and ACCSYS TECHPLC EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCSYS TECHPLC EO and American Homes 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 American Homes 4 are associated (or correlated) with ACCSYS TECHPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCSYS TECHPLC EO has no effect on the direction of American Homes i.e., American Homes and ACCSYS TECHPLC go up and down completely randomly.

Pair Corralation between American Homes and ACCSYS TECHPLC

Assuming the 90 days trading horizon American Homes 4 is expected to under-perform the ACCSYS TECHPLC. But the stock apears to be less risky and, when comparing its historical volatility, American Homes 4 is 1.54 times less risky than ACCSYS TECHPLC. The stock trades about -0.04 of its potential returns per unit of risk. The ACCSYS TECHPLC EO is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  52.00  in ACCSYS TECHPLC EO on December 22, 2024 and sell it today you would lose (1.00) from holding ACCSYS TECHPLC EO or give up 1.92% of portfolio value over 90 days.

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

American Homes 4  vs.  ACCSYS TECHPLC EO

American Homes 4

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, American Homes is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ACCSYS TECHPLC EO

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACCSYS TECHPLC EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ACCSYS TECHPLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Homes and ACCSYS TECHPLC

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

The idea behind American Homes 4 and ACCSYS TECHPLC EO 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.