Correlation Between AIM Industrial and K W
Can any of the company-specific risk be diversified away by investing in both AIM Industrial and K W 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 AIM Industrial and K W into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIM Industrial Growth and K W Metal, you can compare the effects of market volatilities on AIM Industrial and K W 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 AIM Industrial with a short position of K W. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM Industrial and K W.
Diversification Opportunities for AIM Industrial and K W
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AIM and KWM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding AIM Industrial Growth and K W Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K W Metal and AIM Industrial 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 AIM Industrial Growth are associated (or correlated) with K W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K W Metal has no effect on the direction of AIM Industrial i.e., AIM Industrial and K W go up and down completely randomly.
Pair Corralation between AIM Industrial and K W
Assuming the 90 days trading horizon AIM Industrial is expected to generate 2.48 times less return on investment than K W. But when comparing it to its historical volatility, AIM Industrial Growth is 2.48 times less risky than K W. It trades about 0.14 of its potential returns per unit of risk. K W Metal is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 124.00 in K W Metal on September 13, 2024 and sell it today you would earn a total of 6.00 from holding K W Metal or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIM Industrial Growth vs. K W Metal
Performance |
| Timeline |
| AIM Industrial Growth |
| K W Metal |
AIM Industrial and K W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIM Industrial and K W
The main advantage of trading using opposite AIM Industrial and K W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM Industrial position performs unexpectedly, K W 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 K W will offset losses from the drop in K W's long position.| AIM Industrial vs. Amata Summit Growth | AIM Industrial vs. WHA Premium Growth | AIM Industrial vs. Digital Telecommunications Infrastructure | AIM Industrial vs. Quality Houses Property |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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