Correlation Between Acco Brands and XIAOMI

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

By analyzing existing cross correlation between Acco Brands and XIAOMI 3375 29 APR 30, you can compare the effects of market volatilities on Acco Brands and XIAOMI 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 Acco Brands with a short position of XIAOMI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and XIAOMI.

Diversification Opportunities for Acco Brands and XIAOMI

0.4

Correlation Coefficient

Acco Brands  XIAOMI

Very weak diversification

The 3 months correlation between Acco and XIAOMI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and XIAOMI 3375 29 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAOMI 3375 29 and Acco Brands 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 Acco Brands are associated (or correlated) with XIAOMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAOMI 3375 29 has no effect on the direction of Acco Brands i.e., Acco Brands and XIAOMI go up and down completely randomly.

Pair Corralation between Acco Brands and XIAOMI

Given the investment horizon of 90 days Acco Brands is expected to under-perform the XIAOMI. In addition to that, Acco Brands is 11.28 times more volatile than XIAOMI 3375 29 APR 30. It trades about -0.56 of its total potential returns per unit of risk. XIAOMI 3375 29 APR 30 is currently generating about 0.71 per unit of volatility. If you would invest  9,126  in XIAOMI 3375 29 APR 30 on October 12, 2024 and sell it today you would earn a total of  16.00  from holding XIAOMI 3375 29 APR 30 or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	10.0%
Values	Daily Returns

Acco Brands  vs.  XIAOMI 3375 29 APR 30

Acco Brands

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

XIAOMI 3375 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XIAOMI 3375 29 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for XIAOMI 3375 29 APR 30 investors.

Pair Trading with Acco Brands and XIAOMI

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

The idea behind Acco Brands and XIAOMI 3375 29 APR 30 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.