Correlation Between Armada Hflr and ACM Research

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

By analyzing existing cross correlation between Armada Hflr Pr and ACM Research Shanghai, you can compare the effects of market volatilities on Armada Hflr and ACM Research 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 Armada Hflr with a short position of ACM Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and ACM Research.

Diversification Opportunities for Armada Hflr and ACM Research

-0.35

Correlation Coefficient

Armada Hflr  ACM Research

Very good diversification

The 3 months correlation between Armada and ACM is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and ACM Research Shanghai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACM Research Shanghai and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with ACM Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACM Research Shanghai has no effect on the direction of Armada Hflr i.e., Armada Hflr and ACM Research go up and down completely randomly.

Pair Corralation between Armada Hflr and ACM Research

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.7 times more return on investment than ACM Research. However, Armada Hflr Pr is 1.43 times less risky than ACM Research. It trades about -0.21 of its potential returns per unit of risk. ACM Research Shanghai is currently generating about -0.17 per unit of risk. If you would invest  1,089  in Armada Hflr Pr on September 22, 2024 and sell it today you would lose (64.00) from holding Armada Hflr Pr or give up 5.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  ACM Research Shanghai

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

ACM Research Shanghai

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACM Research Shanghai are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ACM Research sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and ACM Research

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

The idea behind Armada Hflr Pr and ACM Research Shanghai 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..