Correlation Between Accenture Plc and Porsche Automobil

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

By analyzing existing cross correlation between Accenture plc and Porsche Automobil Holding, you can compare the effects of market volatilities on Accenture Plc and Porsche Automobil 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 Accenture Plc with a short position of Porsche Automobil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Porsche Automobil.

Diversification Opportunities for Accenture Plc and Porsche Automobil

-0.39

Correlation Coefficient

Accenture Plc  Porsche Automobil

Very good diversification

The 3 months correlation between Accenture and Porsche is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Porsche Automobil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobil Holding and Accenture Plc 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 Accenture plc are associated (or correlated) with Porsche Automobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobil Holding has no effect on the direction of Accenture Plc i.e., Accenture Plc and Porsche Automobil go up and down completely randomly.

Pair Corralation between Accenture Plc and Porsche Automobil

Considering the 90-day investment horizon Accenture plc is expected to generate 0.63 times more return on investment than Porsche Automobil. However, Accenture plc is 1.6 times less risky than Porsche Automobil. It trades about 0.07 of its potential returns per unit of risk. Porsche Automobil Holding is currently generating about -0.11 per unit of risk. If you would invest  34,049  in Accenture plc on September 3, 2024 and sell it today you would earn a total of  2,188  from holding Accenture plc or generate 6.43% return on investment over 90 days.

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

Accenture plc  vs.  Porsche Automobil Holding

Accenture plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Accenture plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Accenture Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Porsche Automobil Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Porsche Automobil Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Accenture Plc and Porsche Automobil

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

The idea behind Accenture plc and Porsche Automobil Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.