Correlation Between Aberforth Smaller and Accsys Technologies

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

By analyzing existing cross correlation between Aberforth Smaller Companies and Accsys Technologies PLC, you can compare the effects of market volatilities on Aberforth Smaller and Accsys Technologies 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 Aberforth Smaller with a short position of Accsys Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberforth Smaller and Accsys Technologies.

Diversification Opportunities for Aberforth Smaller and Accsys Technologies

0.77

Correlation Coefficient

Aberforth Smaller  Accsys Technologies

Poor diversification

The 3 months correlation between Aberforth and Accsys is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aberforth Smaller Companies and Accsys Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accsys Technologies PLC and Aberforth Smaller 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 Aberforth Smaller Companies are associated (or correlated) with Accsys Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accsys Technologies PLC has no effect on the direction of Aberforth Smaller i.e., Aberforth Smaller and Accsys Technologies go up and down completely randomly.

Pair Corralation between Aberforth Smaller and Accsys Technologies

Assuming the 90 days trading horizon Aberforth Smaller is expected to generate 17.44 times less return on investment than Accsys Technologies. But when comparing it to its historical volatility, Aberforth Smaller Companies is 3.82 times less risky than Accsys Technologies. It trades about 0.0 of its potential returns per unit of risk. Accsys Technologies PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,655  in Accsys Technologies PLC on September 4, 2024 and sell it today you would earn a total of  15.00  from holding Accsys Technologies PLC or generate 0.32% return on investment over 90 days.

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

Aberforth Smaller Companies  vs.  Accsys Technologies PLC

Aberforth Smaller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberforth Smaller Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aberforth Smaller is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Accsys Technologies PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aberforth Smaller and Accsys Technologies

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

The idea behind Aberforth Smaller Companies and Accsys Technologies PLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.