Correlation Between Beacon Roofing and ACS Actividades

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

By analyzing existing cross correlation between Beacon Roofing Supply and ACS Actividades De, you can compare the effects of market volatilities on Beacon Roofing and ACS Actividades 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 Beacon Roofing with a short position of ACS Actividades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beacon Roofing and ACS Actividades.

Diversification Opportunities for Beacon Roofing and ACS Actividades

0.58

Correlation Coefficient

Beacon Roofing  ACS Actividades

Very weak diversification

The 3 months correlation between Beacon and ACS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Beacon Roofing Supply and ACS Actividades De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACS Actividades De and Beacon Roofing 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 Beacon Roofing Supply are associated (or correlated) with ACS Actividades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACS Actividades De has no effect on the direction of Beacon Roofing i.e., Beacon Roofing and ACS Actividades go up and down completely randomly.

Pair Corralation between Beacon Roofing and ACS Actividades

Given the investment horizon of 90 days Beacon Roofing Supply is expected to generate 0.78 times more return on investment than ACS Actividades. However, Beacon Roofing Supply is 1.29 times less risky than ACS Actividades. It trades about 0.21 of its potential returns per unit of risk. ACS Actividades De is currently generating about 0.15 per unit of risk. If you would invest  10,032  in Beacon Roofing Supply on December 27, 2024 and sell it today you would earn a total of  2,352  from holding Beacon Roofing Supply or generate 23.44% return on investment over 90 days.

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

Beacon Roofing Supply  vs.  ACS Actividades De

Beacon Roofing Supply

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Roofing Supply are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Beacon Roofing displayed solid returns over the last few months and may actually be approaching a breakup point.

ACS Actividades De

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades De are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ACS Actividades showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beacon Roofing and ACS Actividades

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

The idea behind Beacon Roofing Supply and ACS Actividades De 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.