Correlation Between Arbor Technology and Acelon Chemicals

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

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

Diversification Opportunities for Arbor Technology and Acelon Chemicals

-0.1

Correlation Coefficient

Arbor Technology  Acelon Chemicals

Good diversification

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

Pair Corralation between Arbor Technology and Acelon Chemicals

Assuming the 90 days trading horizon Arbor Technology is expected to generate 0.84 times more return on investment than Acelon Chemicals. However, Arbor Technology is 1.2 times less risky than Acelon Chemicals. It trades about 0.24 of its potential returns per unit of risk. Acelon Chemicals Fiber is currently generating about -0.04 per unit of risk. If you would invest  4,010  in Arbor Technology on September 27, 2024 and sell it today you would earn a total of  1,250  from holding Arbor Technology or generate 31.17% return on investment over 90 days.

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

Arbor Technology  vs.  Acelon Chemicals Fiber

Arbor Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Acelon Chemicals Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Arbor Technology and Acelon Chemicals

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

The idea behind Arbor Technology and Acelon Chemicals Fiber 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.