Correlation Between Accton Technology and Vivotek

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

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

Diversification Opportunities for Accton Technology and Vivotek

0.84

Correlation Coefficient

Accton Technology  Vivotek

Very poor diversification

The 3 months correlation between Accton and Vivotek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Accton Technology Corp and Vivotek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivotek and Accton 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 Accton Technology Corp are associated (or correlated) with Vivotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivotek has no effect on the direction of Accton Technology i.e., Accton Technology and Vivotek go up and down completely randomly.

Pair Corralation between Accton Technology and Vivotek

Assuming the 90 days trading horizon Accton Technology Corp is expected to generate 1.57 times more return on investment than Vivotek. However, Accton Technology is 1.57 times more volatile than Vivotek. It trades about -0.06 of its potential returns per unit of risk. Vivotek is currently generating about -0.14 per unit of risk. If you would invest  46,600  in Accton Technology Corp on February 4, 2024 and sell it today you would lose (2,350) from holding Accton Technology Corp or give up 5.04% of portfolio value over 90 days.

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

Accton Technology Corp  vs.  Vivotek

Accton Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accton Technology Corp 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 June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Vivotek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivotek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Accton Technology and Vivotek

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

The idea behind Accton Technology Corp and Vivotek 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.