Correlation Between Aimfinity Investment and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Aimfinity Investment and Iridium Communications 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 Aimfinity Investment and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aimfinity Investment I and Iridium Communications, you can compare the effects of market volatilities on Aimfinity Investment and Iridium Communications 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 Aimfinity Investment with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimfinity Investment and Iridium Communications.
Diversification Opportunities for Aimfinity Investment and Iridium Communications
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aimfinity and Iridium is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aimfinity Investment I and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Aimfinity Investment 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 Aimfinity Investment I are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Aimfinity Investment i.e., Aimfinity Investment and Iridium Communications go up and down completely randomly.
Pair Corralation between Aimfinity Investment and Iridium Communications
Assuming the 90 days horizon Aimfinity Investment I is expected to generate 0.22 times more return on investment than Iridium Communications. However, Aimfinity Investment I is 4.48 times less risky than Iridium Communications. It trades about 0.15 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.02 per unit of risk. If you would invest 1,166 in Aimfinity Investment I on August 31, 2024 and sell it today you would earn a total of 22.00 from holding Aimfinity Investment I or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aimfinity Investment I vs. Iridium Communications
Performance |
| Timeline |
| Aimfinity Investment |
| Iridium Communications |
Aimfinity Investment and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aimfinity Investment and Iridium Communications
The main advantage of trading using opposite Aimfinity Investment and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimfinity Investment position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Aimfinity Investment vs. Iridium Communications | Aimfinity Investment vs. NioCorp Developments Ltd | Aimfinity Investment vs. Flexible Solutions International | Aimfinity Investment vs. Tesla Inc |
| Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One | Iridium Communications vs. SK Telecom Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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