Correlation Between Aluminumof China and AECOM
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and AECOM 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 Aluminumof China and AECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and AECOM, you can compare the effects of market volatilities on Aluminumof China and AECOM 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 Aluminumof China with a short position of AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and AECOM.
Diversification Opportunities for Aluminumof China and AECOM
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aluminumof and AECOM is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM and Aluminumof China 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 Aluminum of are associated (or correlated) with AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of Aluminumof China i.e., Aluminumof China and AECOM go up and down completely randomly.
Pair Corralation between Aluminumof China and AECOM
Assuming the 90 days horizon Aluminum of is expected to generate 2.2 times more return on investment than AECOM. However, Aluminumof China is 2.2 times more volatile than AECOM. It trades about 0.09 of its potential returns per unit of risk. AECOM is currently generating about 0.07 per unit of risk. If you would invest 29.00 in Aluminum of on September 12, 2024 and sell it today you would earn a total of 28.00 from holding Aluminum of or generate 96.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. AECOM
Performance |
| Timeline |
| Aluminumof China |
| AECOM |
Aluminumof China and AECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and AECOM
The main advantage of trading using opposite Aluminumof China and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, AECOM 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 AECOM will offset losses from the drop in AECOM's long position.| Aluminumof China vs. Norsk Hydro ASA | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Superior Plus Corp | Aluminumof China vs. SIVERS SEMICONDUCTORS AB |
| AECOM vs. Zurich Insurance Group | AECOM vs. PARKEN Sport Entertainment | AECOM vs. CEOTRONICS | AECOM vs. Aluminum of |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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