Correlation Between AAP and Mynaric AG
Can any of the company-specific risk be diversified away by investing in both AAP and Mynaric AG 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 AAP and Mynaric AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAP Inc and Mynaric AG ADR, you can compare the effects of market volatilities on AAP and Mynaric AG 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 AAP with a short position of Mynaric AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAP and Mynaric AG.
Diversification Opportunities for AAP and Mynaric AG
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AAP and Mynaric is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding AAP Inc and Mynaric AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mynaric AG ADR and AAP 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 AAP Inc are associated (or correlated) with Mynaric AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mynaric AG ADR has no effect on the direction of AAP i.e., AAP and Mynaric AG go up and down completely randomly.
Pair Corralation between AAP and Mynaric AG
Given the investment horizon of 90 days AAP Inc is expected to generate 4.89 times more return on investment than Mynaric AG. However, AAP is 4.89 times more volatile than Mynaric AG ADR. It trades about 0.1 of its potential returns per unit of risk. Mynaric AG ADR is currently generating about 0.14 per unit of risk. If you would invest 0.02 in AAP Inc on August 28, 2024 and sell it today you would earn a total of 0.00 from holding AAP Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAP Inc vs. Mynaric AG ADR
Performance |
| Timeline |
| AAP Inc |
| Mynaric AG ADR |
AAP and Mynaric AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAP and Mynaric AG
The main advantage of trading using opposite AAP and Mynaric AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAP position performs unexpectedly, Mynaric AG 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 Mynaric AG will offset losses from the drop in Mynaric AG's long position.The idea behind AAP Inc and Mynaric AG ADR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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