Correlation Between AAC Clyde and AXichem AB
Can any of the company-specific risk be diversified away by investing in both AAC Clyde and AXichem AB 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 AAC Clyde and AXichem AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC Clyde Space and aXichem AB, you can compare the effects of market volatilities on AAC Clyde and AXichem AB 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 AAC Clyde with a short position of AXichem AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and AXichem AB.
Diversification Opportunities for AAC Clyde and AXichem AB
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AAC and AXichem is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and aXichem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aXichem AB and AAC Clyde 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 AAC Clyde Space are associated (or correlated) with AXichem AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aXichem AB has no effect on the direction of AAC Clyde i.e., AAC Clyde and AXichem AB go up and down completely randomly.
Pair Corralation between AAC Clyde and AXichem AB
Assuming the 90 days trading horizon AAC Clyde Space is expected to generate 0.86 times more return on investment than AXichem AB. However, AAC Clyde Space is 1.16 times less risky than AXichem AB. It trades about 0.21 of its potential returns per unit of risk. aXichem AB is currently generating about -0.04 per unit of risk. If you would invest 3,580 in AAC Clyde Space on August 31, 2024 and sell it today you would earn a total of 990.00 from holding AAC Clyde Space or generate 27.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC Clyde Space vs. aXichem AB
Performance |
| Timeline |
| AAC Clyde Space |
| aXichem AB |
AAC Clyde and AXichem AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC Clyde and AXichem AB
The main advantage of trading using opposite AAC Clyde and AXichem AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Clyde position performs unexpectedly, AXichem AB 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 AXichem AB will offset losses from the drop in AXichem AB's long position.| AAC Clyde vs. Saab AB | AAC Clyde vs. CTT Systems AB | AAC Clyde vs. W5 Solutions AB | AAC Clyde vs. AVTECH Sweden AB |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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