Correlation Between COSTCO WHOLESALE and Acer Incorporated

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

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

Diversification Opportunities for COSTCO WHOLESALE and Acer Incorporated

0.01

Correlation Coefficient

COSTCO WHOLESALE  Acer Incorporated

Significant diversification

The 3 months correlation between COSTCO and Acer is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Acer Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer Incorporated and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR are associated (or correlated) with Acer Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer Incorporated has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Acer Incorporated go up and down completely randomly.

Pair Corralation between COSTCO WHOLESALE and Acer Incorporated

Assuming the 90 days trading horizon COSTCO WHOLESALE is expected to generate 2.46 times less return on investment than Acer Incorporated. But when comparing it to its historical volatility, COSTCO WHOLESALE CDR is 4.77 times less risky than Acer Incorporated. It trades about 0.09 of its potential returns per unit of risk. Acer Incorporated is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Acer Incorporated on October 4, 2024 and sell it today you would earn a total of  150.00  from holding Acer Incorporated or generate 48.39% return on investment over 90 days.

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

COSTCO WHOLESALE CDR  vs.  Acer Incorporated

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSTCO WHOLESALE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Acer Incorporated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acer Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Acer Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COSTCO WHOLESALE and Acer Incorporated

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

The idea behind COSTCO WHOLESALE CDR and Acer Incorporated 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.