Correlation Between AECI and We Buy
Can any of the company-specific risk be diversified away by investing in both AECI and We Buy 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 AECI and We Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECI and We Buy Cars, you can compare the effects of market volatilities on AECI and We Buy 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 AECI with a short position of We Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECI and We Buy.
Diversification Opportunities for AECI and We Buy
Pay attention - limited upside
The 3 months correlation between AECI and WBC is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding AECI and We Buy Cars in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on We Buy Cars and AECI 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 AECI are associated (or correlated) with We Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of We Buy Cars has no effect on the direction of AECI i.e., AECI and We Buy go up and down completely randomly.
Pair Corralation between AECI and We Buy
Assuming the 90 days trading horizon AECI is expected to generate 14.39 times less return on investment than We Buy. But when comparing it to its historical volatility, AECI is 1.31 times less risky than We Buy. It trades about 0.02 of its potential returns per unit of risk. We Buy Cars is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 204,000 in We Buy Cars on August 31, 2024 and sell it today you would earn a total of 240,500 from holding We Buy Cars or generate 117.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 32.79% |
| Values | Daily Returns |
AECI vs. We Buy Cars
Performance |
| Timeline |
| AECI |
| We Buy Cars |
AECI and We Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECI and We Buy
The main advantage of trading using opposite AECI and We Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECI position performs unexpectedly, We Buy 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 We Buy will offset losses from the drop in We Buy's long position.| AECI vs. Zeder Investments | AECI vs. Frontier Transport Holdings | AECI vs. Astoria Investments | AECI vs. Copper 360 |
| We Buy vs. Safari Investments RSA | We Buy vs. eMedia Holdings Limited | We Buy vs. Afine Investments | We Buy vs. E Media Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |