Correlation Between AAC Clyde and Mekonomen
Can any of the company-specific risk be diversified away by investing in both AAC Clyde and Mekonomen 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 Mekonomen 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 Mekonomen AB, you can compare the effects of market volatilities on AAC Clyde and Mekonomen 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 Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and Mekonomen.
Diversification Opportunities for AAC Clyde and Mekonomen
Good diversification
The 3 months correlation between AAC and Mekonomen is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of AAC Clyde i.e., AAC Clyde and Mekonomen go up and down completely randomly.
Pair Corralation between AAC Clyde and Mekonomen
Assuming the 90 days trading horizon AAC Clyde Space is expected to generate 3.58 times more return on investment than Mekonomen. However, AAC Clyde is 3.58 times more volatile than Mekonomen AB. It trades about 0.22 of its potential returns per unit of risk. Mekonomen AB is currently generating about -0.13 per unit of risk. If you would invest 3,530 in AAC Clyde Space on August 28, 2024 and sell it today you would earn a total of 965.00 from holding AAC Clyde Space or generate 27.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC Clyde Space vs. Mekonomen AB
Performance |
| Timeline |
| AAC Clyde Space |
| Mekonomen AB |
AAC Clyde and Mekonomen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC Clyde and Mekonomen
The main advantage of trading using opposite AAC Clyde and Mekonomen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Clyde position performs unexpectedly, Mekonomen 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 Mekonomen will offset losses from the drop in Mekonomen's long position.| AAC Clyde vs. GomSpace Group AB | AAC Clyde vs. Eolus Vind AB | AAC Clyde vs. Fingerprint Cards AB | AAC Clyde vs. SaltX Technology Holding |
| Mekonomen vs. New Wave Group | Mekonomen vs. Clas Ohlson AB | Mekonomen vs. BE Group AB | Mekonomen vs. Betsson AB |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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