Correlation Between AccoladeInc and Simulations Plus

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

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

Diversification Opportunities for AccoladeInc and Simulations Plus

-0.65

Correlation Coefficient

AccoladeInc  Simulations Plus

Excellent diversification

The 3 months correlation between AccoladeInc and Simulations is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AccoladeInc and Simulations Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simulations Plus and AccoladeInc 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 AccoladeInc are associated (or correlated) with Simulations Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simulations Plus has no effect on the direction of AccoladeInc i.e., AccoladeInc and Simulations Plus go up and down completely randomly.

Pair Corralation between AccoladeInc and Simulations Plus

Given the investment horizon of 90 days AccoladeInc is expected to under-perform the Simulations Plus. But the stock apears to be less risky and, when comparing its historical volatility, AccoladeInc is 1.67 times less risky than Simulations Plus. The stock trades about -0.08 of its potential returns per unit of risk. The Simulations Plus is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,378  in Simulations Plus on January 20, 2024 and sell it today you would earn a total of  63.00  from holding Simulations Plus or generate 1.44% return on investment over 90 days.

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

AccoladeInc  vs.  Simulations Plus

AccoladeInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AccoladeInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Simulations Plus

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simulations Plus are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting essential indicators, Simulations Plus reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AccoladeInc and Simulations Plus

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

The idea behind AccoladeInc and Simulations Plus 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.