Correlation Between Aquarius Engines and Accel Solutions

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

By analyzing existing cross correlation between Aquarius Engines AM and Accel Solutions Group, you can compare the effects of market volatilities on Aquarius Engines and Accel Solutions 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 Aquarius Engines with a short position of Accel Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquarius Engines and Accel Solutions.

Diversification Opportunities for Aquarius Engines and Accel Solutions

-0.57

Correlation Coefficient

Aquarius Engines  Accel Solutions

Excellent diversification

The 3 months correlation between Aquarius and Accel is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aquarius Engines AM and Accel Solutions Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accel Solutions Group and Aquarius Engines 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 Aquarius Engines AM are associated (or correlated) with Accel Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accel Solutions Group has no effect on the direction of Aquarius Engines i.e., Aquarius Engines and Accel Solutions go up and down completely randomly.

Pair Corralation between Aquarius Engines and Accel Solutions

Assuming the 90 days trading horizon Aquarius Engines AM is expected to under-perform the Accel Solutions. In addition to that, Aquarius Engines is 1.84 times more volatile than Accel Solutions Group. It trades about -0.09 of its total potential returns per unit of risk. Accel Solutions Group is currently generating about 0.15 per unit of volatility. If you would invest  10,880  in Accel Solutions Group on September 1, 2024 and sell it today you would earn a total of  2,030  from holding Accel Solutions Group or generate 18.66% return on investment over 90 days.

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

Aquarius Engines AM  vs.  Accel Solutions Group

Aquarius Engines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquarius Engines AM 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 basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Accel Solutions Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accel Solutions Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Accel Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquarius Engines and Accel Solutions

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

The idea behind Aquarius Engines AM and Accel Solutions Group 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.