Correlation Between Aldel Financial and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Fenbo Holdings 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 Fenbo Holdings 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 Fenbo Holdings Limited, you can compare the effects of market volatilities on Aldel Financial and Fenbo Holdings 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 Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Fenbo Holdings.
Diversification Opportunities for Aldel Financial and Fenbo Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aldel and Fenbo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings 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 Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Aldel Financial i.e., Aldel Financial and Fenbo Holdings go up and down completely randomly.
Pair Corralation between Aldel Financial and Fenbo Holdings
Assuming the 90 days horizon Aldel Financial is expected to generate 8.4 times less return on investment than Fenbo Holdings. But when comparing it to its historical volatility, Aldel Financial II is 82.63 times less risky than Fenbo Holdings. It trades about 0.11 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 444.00 in Fenbo Holdings Limited on August 26, 2024 and sell it today you would lose (249.00) from holding Fenbo Holdings Limited or give up 56.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 10.04% |
| Values | Daily Returns |
Aldel Financial II vs. Fenbo Holdings Limited
Performance |
| Timeline |
| Aldel Financial II |
| Fenbo Holdings |
Aldel Financial and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and Fenbo Holdings
The main advantage of trading using opposite Aldel Financial and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.| Aldel Financial vs. Porvair plc | Aldel Financial vs. AerSale Corp | Aldel Financial vs. Mind Medicine | Aldel Financial vs. Inhibrx |
| Fenbo Holdings vs. KNOT Offshore Partners | Fenbo Holdings vs. Aldel Financial II | Fenbo Holdings vs. Stepstone Group | Fenbo Holdings vs. Tencent Music Entertainment |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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