Correlation Between Accenture Plc and Sino Bioenergy

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

By analyzing existing cross correlation between Accenture plc and Sino Bioenergy Corp, you can compare the effects of market volatilities on Accenture Plc and Sino Bioenergy 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 Sino Bioenergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Sino Bioenergy.

Diversification Opportunities for Accenture Plc and Sino Bioenergy

-0.77

Correlation Coefficient

Accenture Plc  Sino Bioenergy

Pay attention - limited upside

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

Pair Corralation between Accenture Plc and Sino Bioenergy

Considering the 90-day investment horizon Accenture plc is expected to under-perform the Sino Bioenergy. But the stock apears to be less risky and, when comparing its historical volatility, Accenture plc is 21.66 times less risky than Sino Bioenergy. The stock trades about -0.48 of its potential returns per unit of risk. The Sino Bioenergy Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Sino Bioenergy Corp on January 31, 2024 and sell it today you would earn a total of  0.04  from holding Sino Bioenergy Corp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Accenture plc  vs.  Sino Bioenergy Corp

Accenture plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accenture plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sino Bioenergy Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Bioenergy Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Sino Bioenergy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Accenture Plc and Sino Bioenergy

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

The idea behind Accenture plc and Sino Bioenergy Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.