Correlation Between Archer Aviation and AIA Group
Can any of the company-specific risk be diversified away by investing in both Archer Aviation and AIA 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 Archer Aviation and AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Aviation and AIA Group, you can compare the effects of market volatilities on Archer Aviation and AIA 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 Archer Aviation with a short position of AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and AIA Group.
Diversification Opportunities for Archer Aviation and AIA Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Archer and AIA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation and AIA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group and Archer Aviation 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 Archer Aviation are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group has no effect on the direction of Archer Aviation i.e., Archer Aviation and AIA Group go up and down completely randomly.
Pair Corralation between Archer Aviation and AIA Group
Given the investment horizon of 90 days Archer Aviation is expected to generate 2.02 times more return on investment than AIA Group. However, Archer Aviation is 2.02 times more volatile than AIA Group. It trades about 0.07 of its potential returns per unit of risk. AIA Group is currently generating about -0.01 per unit of risk. If you would invest 221.00 in Archer Aviation on August 28, 2024 and sell it today you would earn a total of 527.00 from holding Archer Aviation or generate 238.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Aviation vs. AIA Group
Performance |
| Timeline |
| Archer Aviation |
| AIA Group |
Archer Aviation and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Aviation and AIA Group
The main advantage of trading using opposite Archer Aviation and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation position performs unexpectedly, AIA 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 AIA Group will offset losses from the drop in AIA Group's long position.| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation vs. Lilium NV |
| AIA Group vs. CNO Financial Group | AIA Group vs. Genworth Financial | AIA Group vs. MetLife Preferred Stock | AIA Group vs. Prudential Public Limited |
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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