Correlation Between Moncler SpA and AAC TECHNOLOGHLDGADR

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

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

Diversification Opportunities for Moncler SpA and AAC TECHNOLOGHLDGADR

-0.22

Correlation Coefficient

Moncler SpA  AAC TECHNOLOGHLDGADR

Very good diversification

The 3 months correlation between Moncler and AAC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Moncler SpA and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and Moncler SpA 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 Moncler SpA are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of Moncler SpA i.e., Moncler SpA and AAC TECHNOLOGHLDGADR go up and down completely randomly.

Pair Corralation between Moncler SpA and AAC TECHNOLOGHLDGADR

Assuming the 90 days horizon Moncler SpA is expected to under-perform the AAC TECHNOLOGHLDGADR. But the stock apears to be less risky and, when comparing its historical volatility, Moncler SpA is 1.68 times less risky than AAC TECHNOLOGHLDGADR. The stock trades about -0.05 of its potential returns per unit of risk. The AAC TECHNOLOGHLDGADR is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  278.00  in AAC TECHNOLOGHLDGADR on September 5, 2024 and sell it today you would earn a total of  150.00  from holding AAC TECHNOLOGHLDGADR or generate 53.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.85%
Values	Daily Returns

Moncler SpA  vs.  AAC TECHNOLOGHLDGADR

Moncler SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moncler SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moncler SpA and AAC TECHNOLOGHLDGADR

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

The idea behind Moncler SpA and AAC TECHNOLOGHLDGADR 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.