Correlation Between Simulations Plus and AccoladeInc

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

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

Diversification Opportunities for Simulations Plus and AccoladeInc

-0.64

Correlation Coefficient

Simulations Plus  AccoladeInc

Excellent diversification

The 3 months correlation between Simulations and AccoladeInc is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Simulations Plus and AccoladeInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AccoladeInc and Simulations Plus 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 Simulations Plus are associated (or correlated) with AccoladeInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AccoladeInc has no effect on the direction of Simulations Plus i.e., Simulations Plus and AccoladeInc go up and down completely randomly.

Pair Corralation between Simulations Plus and AccoladeInc

Considering the 90-day investment horizon Simulations Plus is expected to generate 1.66 times more return on investment than AccoladeInc. However, Simulations Plus is 1.66 times more volatile than AccoladeInc. It trades about 0.09 of its potential returns per unit of risk. AccoladeInc is currently generating about -0.05 per unit of risk. If you would invest  4,162  in Simulations Plus on January 24, 2024 and sell it today you would earn a total of  338.00  from holding Simulations Plus or generate 8.12% return on investment over 90 days.

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

Simulations Plus  vs.  AccoladeInc

Simulations Plus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simulations Plus are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Simulations Plus reported solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady 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.

Pair Trading with Simulations Plus and AccoladeInc

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

The idea behind Simulations Plus and AccoladeInc 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.