Correlation Between Aeorema Communications and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Aeorema Communications and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Intermediate Capital.
Diversification Opportunities for Aeorema Communications and Intermediate Capital
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aeorema and Intermediate is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Intermediate Capital go up and down completely randomly.
Pair Corralation between Aeorema Communications and Intermediate Capital
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Intermediate Capital. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 1.59 times less risky than Intermediate Capital. The stock trades about -0.07 of its potential returns per unit of risk. The Intermediate Capital Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 213,069 in Intermediate Capital Group on September 3, 2024 and sell it today you would lose (1,269) from holding Intermediate Capital Group or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Intermediate Capital Group
Performance |
| Timeline |
| Aeorema Communications |
| Intermediate Capital |
Aeorema Communications and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Intermediate Capital
The main advantage of trading using opposite Aeorema Communications and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Aeorema Communications vs. Creo Medical Group | Aeorema Communications vs. Grieg Seafood | Aeorema Communications vs. Medical Properties Trust | Aeorema Communications vs. CompuGroup Medical AG |
| Intermediate Capital vs. SupplyMe Capital PLC | Intermediate Capital vs. 88 Energy | Intermediate Capital vs. Vodafone Group PLC | Intermediate Capital vs. Vodafone Group PLC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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