Correlation Between AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2

Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2 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 AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AECOM TECHNOLOGY and OVERSEA CHINUNSPADR2, you can compare the effects of market volatilities on AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2 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 AECOM TECHNOLOGY with a short position of OVERSEA CHINUNSPADR/2. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2.

Diversification Opportunities for AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2

0.76

Correlation Coefficient

AECOM TECHNOLOGY  OVERSEA CHINUNSPADR/2

Poor diversification

The 3 months correlation between AECOM and OVERSEA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and OVERSEA CHINUNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVERSEA CHINUNSPADR/2 and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with OVERSEA CHINUNSPADR/2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVERSEA CHINUNSPADR/2 has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2 go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 1.41 times less return on investment than OVERSEA CHINUNSPADR/2. In addition to that, AECOM TECHNOLOGY is 1.24 times more volatile than OVERSEA CHINUNSPADR2. It trades about 0.05 of its total potential returns per unit of risk. OVERSEA CHINUNSPADR2 is currently generating about 0.08 per unit of volatility. If you would invest  1,511  in OVERSEA CHINUNSPADR2 on October 11, 2024 and sell it today you would earn a total of  829.00  from holding OVERSEA CHINUNSPADR2 or generate 54.86% return on investment over 90 days.

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

AECOM TECHNOLOGY  vs.  OVERSEA CHINUNSPADR2

AECOM TECHNOLOGY

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

OVERSEA CHINUNSPADR/2

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OVERSEA CHINUNSPADR2 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, OVERSEA CHINUNSPADR/2 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2

The main advantage of trading using opposite AECOM TECHNOLOGY and OVERSEA CHINUNSPADR/2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY position performs unexpectedly, OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 will offset losses from the drop in OVERSEA CHINUNSPADR/2's long position.

The idea behind AECOM TECHNOLOGY and OVERSEA CHINUNSPADR2 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.