Correlation Between Aerodrome and Compugen
Can any of the company-specific risk be diversified away by investing in both Aerodrome and Compugen 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 Aerodrome and Compugen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerodrome Group and Compugen, you can compare the effects of market volatilities on Aerodrome and Compugen 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 Aerodrome with a short position of Compugen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerodrome and Compugen.
Diversification Opportunities for Aerodrome and Compugen
Excellent diversification
The 3 months correlation between Aerodrome and Compugen is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aerodrome Group and Compugen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugen and Aerodrome 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 Aerodrome Group are associated (or correlated) with Compugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugen has no effect on the direction of Aerodrome i.e., Aerodrome and Compugen go up and down completely randomly.
Pair Corralation between Aerodrome and Compugen
Assuming the 90 days trading horizon Aerodrome Group is expected to generate 2.31 times more return on investment than Compugen. However, Aerodrome is 2.31 times more volatile than Compugen. It trades about -0.07 of its potential returns per unit of risk. Compugen is currently generating about -0.38 per unit of risk. If you would invest 8,670 in Aerodrome Group on August 29, 2024 and sell it today you would lose (1,070) from holding Aerodrome Group or give up 12.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerodrome Group vs. Compugen
Performance |
| Timeline |
| Aerodrome Group |
| Compugen |
Aerodrome and Compugen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerodrome and Compugen
The main advantage of trading using opposite Aerodrome and Compugen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerodrome position performs unexpectedly, Compugen 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 Compugen will offset losses from the drop in Compugen's long position.| Aerodrome vs. Bezeq Israeli Telecommunication | Aerodrome vs. Tower Semiconductor | Aerodrome vs. Israel Discount Bank | Aerodrome vs. Holmes Place International |
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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