Correlation Between ClearOne and AAC Technologies

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

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

Diversification Opportunities for ClearOne and AAC Technologies

-0.34

Correlation Coefficient

ClearOne  AAC Technologies

Very good diversification

The 3 months correlation between ClearOne and AAC is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ClearOne and AAC Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Technologies Holdings and ClearOne 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 ClearOne are associated (or correlated) with AAC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Technologies Holdings has no effect on the direction of ClearOne i.e., ClearOne and AAC Technologies go up and down completely randomly.

Pair Corralation between ClearOne and AAC Technologies

Given the investment horizon of 90 days ClearOne is expected to generate 3.22 times more return on investment than AAC Technologies. However, ClearOne is 3.22 times more volatile than AAC Technologies Holdings. It trades about 0.06 of its potential returns per unit of risk. AAC Technologies Holdings is currently generating about 0.15 per unit of risk. If you would invest  63.00  in ClearOne on December 28, 2024 and sell it today you would earn a total of  4.00  from holding ClearOne or generate 6.35% return on investment over 90 days.

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

ClearOne  vs.  AAC Technologies Holdings

ClearOne

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ClearOne are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, ClearOne displayed solid returns over the last few months and may actually be approaching a breakup point.

AAC Technologies Holdings

Risk-Adjusted Performance

Good

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

Pair Trading with ClearOne and AAC Technologies

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

The idea behind ClearOne and AAC Technologies Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.