Correlation Between ACAFP and Acme United

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

By analyzing existing cross correlation between ACAFP 8125 and Acme United, you can compare the effects of market volatilities on ACAFP 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 ACAFP with a short position of Acme United. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACAFP and Acme United.

Diversification Opportunities for ACAFP and Acme United

0.01

Correlation Coefficient

ACAFP  Acme United

Significant diversification

The 3 months correlation between ACAFP and Acme is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ACAFP 8125 and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United and ACAFP 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 ACAFP 8125 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 ACAFP i.e., ACAFP and Acme United go up and down completely randomly.

Pair Corralation between ACAFP and Acme United

Assuming the 90 days trading horizon ACAFP is expected to generate 31.37 times less return on investment than Acme United. But when comparing it to its historical volatility, ACAFP 8125 is 15.69 times less risky than Acme United. It trades about 0.04 of its potential returns per unit of risk. Acme United is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,680  in Acme United on December 24, 2024 and sell it today you would earn a total of  312.00  from holding Acme United or generate 8.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

ACAFP 8125  vs.  Acme United

ACAFP 8125

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ACAFP 8125 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ACAFP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Acme United may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ACAFP and Acme United

The main advantage of trading using opposite ACAFP and Acme United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACAFP 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 ACAFP 8125 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.