Correlation Between Abovenet Communications and Accelrys

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

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

Diversification Opportunities for Abovenet Communications and Accelrys

0.0

Correlation Coefficient

Abovenet Communications  Accelrys

Pay attention - limited upside

The 3 months correlation between Abovenet and Accelrys is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abovenet Communications and Accelrys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelrys and Abovenet Communications 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 Abovenet Communications are associated (or correlated) with Accelrys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelrys has no effect on the direction of Abovenet Communications i.e., Abovenet Communications and Accelrys go up and down completely randomly.

Pair Corralation between Abovenet Communications and Accelrys

If you would invest (100.00) in Accelrys on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Accelrys or generate -100.0% return on investment over 90 days.

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

Abovenet Communications  vs.  Accelrys

Abovenet Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abovenet Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Abovenet Communications is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Accelrys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accelrys has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Accelrys is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Abovenet Communications and Accelrys

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

The idea behind Abovenet Communications and Accelrys 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.