Correlation Between Aldel Financial and Dixons Carphone
Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Dixons Carphone 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 Aldel Financial and Dixons Carphone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and Dixons Carphone plc, you can compare the effects of market volatilities on Aldel Financial and Dixons Carphone 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 Aldel Financial with a short position of Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Dixons Carphone.
Diversification Opportunities for Aldel Financial and Dixons Carphone
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aldel and Dixons is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Aldel Financial i.e., Aldel Financial and Dixons Carphone go up and down completely randomly.
Pair Corralation between Aldel Financial and Dixons Carphone
Given the investment horizon of 90 days Aldel Financial II is expected to generate 0.04 times more return on investment than Dixons Carphone. However, Aldel Financial II is 22.25 times less risky than Dixons Carphone. It trades about 0.23 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.01 per unit of risk. If you would invest 999.00 in Aldel Financial II on December 8, 2024 and sell it today you would earn a total of 5.00 from holding Aldel Financial II or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldel Financial II vs. Dixons Carphone plc
Performance |
| Timeline |
| Aldel Financial II |
| Dixons Carphone plc |
Aldel Financial and Dixons Carphone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and Dixons Carphone
The main advantage of trading using opposite Aldel Financial and Dixons Carphone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, Dixons Carphone 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 Dixons Carphone will offset losses from the drop in Dixons Carphone's long position.| Aldel Financial vs. Amkor Technology | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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