Correlation Between Adata Technology and Apacer Technology

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

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

Diversification Opportunities for Adata Technology and Apacer Technology

0.38

Correlation Coefficient

Adata Technology  Apacer Technology

Weak diversification

The 3 months correlation between Adata and Apacer is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Adata Technology Co and Apacer Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apacer Technology and Adata 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 Adata Technology Co are associated (or correlated) with Apacer Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apacer Technology has no effect on the direction of Adata Technology i.e., Adata Technology and Apacer Technology go up and down completely randomly.

Pair Corralation between Adata Technology and Apacer Technology

Assuming the 90 days trading horizon Adata Technology Co is expected to generate 1.01 times more return on investment than Apacer Technology. However, Adata Technology is 1.01 times more volatile than Apacer Technology. It trades about 0.05 of its potential returns per unit of risk. Apacer Technology is currently generating about -0.13 per unit of risk. If you would invest  8,610  in Adata Technology Co on September 2, 2024 and sell it today you would earn a total of  110.00  from holding Adata Technology Co or generate 1.28% return on investment over 90 days.

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

Adata Technology Co  vs.  Apacer Technology

Adata Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adata Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Adata Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Apacer Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apacer Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Adata Technology and Apacer Technology

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

The idea behind Adata Technology Co and Apacer Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.