Correlation Between ACI Worldwide and Couchbase

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

By analyzing existing cross correlation between ACI Worldwide and Couchbase, you can compare the effects of market volatilities on ACI Worldwide and Couchbase 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 ACI Worldwide with a short position of Couchbase. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACI Worldwide and Couchbase.

Diversification Opportunities for ACI Worldwide and Couchbase

0.77

Correlation Coefficient

ACI Worldwide  Couchbase

Poor diversification

The 3 months correlation between ACI and Couchbase is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and Couchbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Couchbase and ACI Worldwide 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 ACI Worldwide are associated (or correlated) with Couchbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Couchbase has no effect on the direction of ACI Worldwide i.e., ACI Worldwide and Couchbase go up and down completely randomly.

Pair Corralation between ACI Worldwide and Couchbase

Given the investment horizon of 90 days ACI Worldwide is expected to generate 1.12 times less return on investment than Couchbase. But when comparing it to its historical volatility, ACI Worldwide is 1.72 times less risky than Couchbase. It trades about 0.08 of its potential returns per unit of risk. Couchbase is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,419  in Couchbase on September 15, 2024 and sell it today you would earn a total of  115.00  from holding Couchbase or generate 8.1% return on investment over 90 days.

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

ACI Worldwide  vs.  Couchbase

ACI Worldwide

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ACI Worldwide are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, ACI Worldwide may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Couchbase

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Couchbase may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ACI Worldwide and Couchbase

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

The idea behind ACI Worldwide and Couchbase 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.