Correlation Between Inter Parfums and Acme United

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

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

Diversification Opportunities for Inter Parfums and Acme United

-0.49

Correlation Coefficient

Inter Parfums  Acme United

Very good diversification

The 3 months correlation between Inter and Acme is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United and Inter Parfums 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 Inter Parfums are associated (or correlated) with Acme United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acme United has no effect on the direction of Inter Parfums i.e., Inter Parfums and Acme United go up and down completely randomly.

Pair Corralation between Inter Parfums and Acme United

Given the investment horizon of 90 days Inter Parfums is expected to under-perform the Acme United. In addition to that, Inter Parfums is 1.05 times more volatile than Acme United. It trades about -0.05 of its total potential returns per unit of risk. Acme United is currently generating about 0.11 per unit of volatility. If you would invest  3,653  in Acme United on December 27, 2024 and sell it today you would earn a total of  442.00  from holding Acme United or generate 12.1% return on investment over 90 days.

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

Inter Parfums  vs.  Acme United

Inter Parfums

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inter Parfums has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Inter Parfums is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Acme United

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acme United are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Acme United unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inter Parfums and Acme United

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

The idea behind Inter Parfums and Acme United 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.