Correlation Between Aecon and Kwesst Micro
Can any of the company-specific risk be diversified away by investing in both Aecon and Kwesst Micro 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 Aecon and Kwesst Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Kwesst Micro Systems, you can compare the effects of market volatilities on Aecon and Kwesst Micro 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 Aecon with a short position of Kwesst Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Kwesst Micro.
Diversification Opportunities for Aecon and Kwesst Micro
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aecon and Kwesst is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group and Kwesst Micro Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwesst Micro Systems and Aecon 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 Aecon Group are associated (or correlated) with Kwesst Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwesst Micro Systems has no effect on the direction of Aecon i.e., Aecon and Kwesst Micro go up and down completely randomly.
Pair Corralation between Aecon and Kwesst Micro
Assuming the 90 days trading horizon Aecon Group is expected to generate 0.48 times more return on investment than Kwesst Micro. However, Aecon Group is 2.07 times less risky than Kwesst Micro. It trades about -0.17 of its potential returns per unit of risk. Kwesst Micro Systems is currently generating about -0.32 per unit of risk. If you would invest 2,723 in Aecon Group on November 2, 2024 and sell it today you would lose (260.00) from holding Aecon Group or give up 9.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aecon Group vs. Kwesst Micro Systems
Performance |
| Timeline |
| Aecon Group |
| Kwesst Micro Systems |
Aecon and Kwesst Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecon and Kwesst Micro
The main advantage of trading using opposite Aecon and Kwesst Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon position performs unexpectedly, Kwesst Micro 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 Kwesst Micro will offset losses from the drop in Kwesst Micro's long position.| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
| Kwesst Micro vs. AnalytixInsight | Kwesst Micro vs. Baylin Technologies | Kwesst Micro vs. Gatekeeper Systems |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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