Correlation Between Aeorema Communications and International Business
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and International Business 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 Aeorema Communications and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and International Business Machines, you can compare the effects of market volatilities on Aeorema Communications and International Business 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 Aeorema Communications with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and International Business.
Diversification Opportunities for Aeorema Communications and International Business
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeorema and International is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and International Business go up and down completely randomly.
Pair Corralation between Aeorema Communications and International Business
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the International Business. In addition to that, Aeorema Communications is 2.09 times more volatile than International Business Machines. It trades about -0.01 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.02 per unit of volatility. If you would invest 10,780 in International Business Machines on August 27, 2024 and sell it today you would earn a total of 1,115 from holding International Business Machines or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.59% |
| Values | Daily Returns |
Aeorema Communications Plc vs. International Business Machine
Performance |
| Timeline |
| Aeorema Communications |
| International Business |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aeorema Communications and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and International Business
The main advantage of trading using opposite Aeorema Communications and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
| International Business vs. Scandinavian Tobacco Group | International Business vs. Lundin Mining Corp | International Business vs. JD Sports Fashion | International Business vs. Caledonia Mining |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |