Correlation Between Accton Technology and GeoVision

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

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

Diversification Opportunities for Accton Technology and GeoVision

-0.63

Correlation Coefficient

Accton Technology  GeoVision

Excellent diversification

The 3 months correlation between Accton and GeoVision is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Accton Technology Corp and GeoVision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVision and Accton 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 Accton Technology Corp are associated (or correlated) with GeoVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVision has no effect on the direction of Accton Technology i.e., Accton Technology and GeoVision go up and down completely randomly.

Pair Corralation between Accton Technology and GeoVision

Assuming the 90 days trading horizon Accton Technology Corp is expected to generate 1.16 times more return on investment than GeoVision. However, Accton Technology is 1.16 times more volatile than GeoVision. It trades about 0.2 of its potential returns per unit of risk. GeoVision is currently generating about -0.06 per unit of risk. If you would invest  55,200  in Accton Technology Corp on September 22, 2024 and sell it today you would earn a total of  20,500  from holding Accton Technology Corp or generate 37.14% return on investment over 90 days.

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

Accton Technology Corp  vs.  GeoVision

Accton Technology Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accton Technology Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Accton Technology showed solid returns over the last few months and may actually be approaching a breakup point.

GeoVision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeoVision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Accton Technology and GeoVision

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

The idea behind Accton Technology Corp and GeoVision 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..