Correlation Between Acushnet Holdings and Focusrite Plc

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

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

Diversification Opportunities for Acushnet Holdings and Focusrite Plc

-0.08

Correlation Coefficient

Acushnet Holdings  Focusrite Plc

Good diversification

The 3 months correlation between Acushnet and Focusrite is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Acushnet Holdings Corp and Focusrite plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focusrite plc and Acushnet Holdings 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 Acushnet Holdings Corp are associated (or correlated) with Focusrite Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focusrite plc has no effect on the direction of Acushnet Holdings i.e., Acushnet Holdings and Focusrite Plc go up and down completely randomly.

Pair Corralation between Acushnet Holdings and Focusrite Plc

Given the investment horizon of 90 days Acushnet Holdings Corp is expected to generate 0.25 times more return on investment than Focusrite Plc. However, Acushnet Holdings Corp is 4.05 times less risky than Focusrite Plc. It trades about -0.03 of its potential returns per unit of risk. Focusrite plc is currently generating about -0.21 per unit of risk. If you would invest  7,317  in Acushnet Holdings Corp on October 17, 2024 and sell it today you would lose (67.00) from holding Acushnet Holdings Corp or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Acushnet Holdings Corp  vs.  Focusrite plc

Acushnet Holdings Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acushnet Holdings Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Acushnet Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Focusrite plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focusrite plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Acushnet Holdings and Focusrite Plc

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

The idea behind Acushnet Holdings Corp and Focusrite plc 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.