Correlation Between AAC Clyde and Saab AB
Can any of the company-specific risk be diversified away by investing in both AAC Clyde and Saab 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 Saab 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 Saab AB, you can compare the effects of market volatilities on AAC Clyde and Saab 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 Saab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and Saab AB.
Diversification Opportunities for AAC Clyde and Saab AB
Poor diversification
The 3 months correlation between AAC and Saab is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Saab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saab 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 Saab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saab AB has no effect on the direction of AAC Clyde i.e., AAC Clyde and Saab AB go up and down completely randomly.
Pair Corralation between AAC Clyde and Saab AB
Assuming the 90 days trading horizon AAC Clyde Space is expected to generate 20.87 times more return on investment than Saab AB. However, AAC Clyde is 20.87 times more volatile than Saab AB. It trades about 0.04 of its potential returns per unit of risk. Saab AB is currently generating about 0.09 per unit of risk. If you would invest 152.00 in AAC Clyde Space on August 30, 2024 and sell it today you would earn a total of 4,453 from holding AAC Clyde Space or generate 2929.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC Clyde Space vs. Saab AB
Performance |
| Timeline |
| AAC Clyde Space |
| Saab AB |
AAC Clyde and Saab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC Clyde and Saab AB
The main advantage of trading using opposite AAC Clyde and Saab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Clyde position performs unexpectedly, Saab 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 Saab AB will offset losses from the drop in Saab AB's long position.| AAC Clyde vs. AroCell AB | AAC Clyde vs. aXichem AB | AAC Clyde vs. Gaming Corps AB | AAC Clyde vs. Alelion Energy Systems |
| Saab AB vs. SSAB AB | Saab AB vs. Boliden AB | Saab AB vs. Sandvik AB | Saab AB vs. Telefonaktiebolaget LM Ericsson |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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