Correlation Between AAC Clyde and MilDef Group
Can any of the company-specific risk be diversified away by investing in both AAC Clyde and MilDef Group 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 MilDef Group 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 MilDef Group AB, you can compare the effects of market volatilities on AAC Clyde and MilDef Group 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 MilDef Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and MilDef Group.
Diversification Opportunities for AAC Clyde and MilDef Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AAC and MilDef is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and MilDef Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MilDef Group 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 MilDef Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MilDef Group AB has no effect on the direction of AAC Clyde i.e., AAC Clyde and MilDef Group go up and down completely randomly.
Pair Corralation between AAC Clyde and MilDef Group
Assuming the 90 days trading horizon AAC Clyde Space is expected to generate 2.08 times more return on investment than MilDef Group. However, AAC Clyde is 2.08 times more volatile than MilDef Group AB. It trades about 0.21 of its potential returns per unit of risk. MilDef Group AB is currently generating about 0.38 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 | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
AAC Clyde Space vs. MilDef Group AB
Performance |
| Timeline |
| AAC Clyde Space |
| MilDef Group AB |
AAC Clyde and MilDef Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC Clyde and MilDef Group
The main advantage of trading using opposite AAC Clyde and MilDef Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Clyde position performs unexpectedly, MilDef Group 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 MilDef Group will offset losses from the drop in MilDef Group'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 |
| MilDef Group vs. Saab AB | MilDef Group vs. CTT Systems AB | MilDef Group vs. W5 Solutions AB | MilDef Group vs. AVTECH Sweden 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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