Correlation Between Western Digital and Acm Research

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

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

Diversification Opportunities for Western Digital and Acm Research

-0.1

Correlation Coefficient

Western Digital  Acm Research

Good diversification

The 3 months correlation between Western and Acm is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Acm Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Research and Western Digital 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 Western Digital are associated (or correlated) with Acm Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Research has no effect on the direction of Western Digital i.e., Western Digital and Acm Research go up and down completely randomly.

Pair Corralation between Western Digital and Acm Research

Considering the 90-day investment horizon Western Digital is expected to generate 1.24 times less return on investment than Acm Research. But when comparing it to its historical volatility, Western Digital is 1.97 times less risky than Acm Research. It trades about 0.07 of its potential returns per unit of risk. Acm Research is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  960.00  in Acm Research on September 22, 2024 and sell it today you would earn a total of  531.00  from holding Acm Research or generate 55.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Western Digital  vs.  Acm Research

Western Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Acm Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acm Research has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Western Digital and Acm Research

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

The idea behind Western Digital and Acm Research 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.