Correlation Between MilDef Group and AAC Clyde
Can any of the company-specific risk be diversified away by investing in both MilDef Group and AAC Clyde 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 MilDef Group and AAC Clyde into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MilDef Group AB and AAC Clyde Space, you can compare the effects of market volatilities on MilDef Group and AAC Clyde 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 MilDef Group with a short position of AAC Clyde. Check out your portfolio center. Please also check ongoing floating volatility patterns of MilDef Group and AAC Clyde.
Diversification Opportunities for MilDef Group and AAC Clyde
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MilDef and AAC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MilDef Group AB and AAC Clyde Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Clyde Space and MilDef Group 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 MilDef Group AB are associated (or correlated) with AAC Clyde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Clyde Space has no effect on the direction of MilDef Group i.e., MilDef Group and AAC Clyde go up and down completely randomly.
Pair Corralation between MilDef Group and AAC Clyde
Assuming the 90 days trading horizon MilDef Group is expected to generate 16.41 times less return on investment than AAC Clyde. But when comparing it to its historical volatility, MilDef Group AB is 15.89 times less risky than AAC Clyde. It trades about 0.05 of its potential returns per unit of risk. AAC Clyde Space is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 129.00 in AAC Clyde Space on August 31, 2024 and sell it today you would earn a total of 4,441 from holding AAC Clyde Space or generate 3442.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.75% |
| Values | Daily Returns |
MilDef Group AB vs. AAC Clyde Space
Performance |
| Timeline |
| MilDef Group AB |
| AAC Clyde Space |
MilDef Group and AAC Clyde Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MilDef Group and AAC Clyde
The main advantage of trading using opposite MilDef Group and AAC Clyde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MilDef Group position performs unexpectedly, AAC Clyde 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 AAC Clyde will offset losses from the drop in AAC Clyde's long position.| MilDef Group vs. Saab AB | MilDef Group vs. CTT Systems AB | MilDef Group vs. W5 Solutions AB | MilDef Group vs. AVTECH Sweden AB |
| AAC Clyde vs. Saab AB | AAC Clyde vs. CTT Systems AB | AAC Clyde vs. W5 Solutions AB | AAC Clyde vs. AVTECH Sweden AB |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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