Correlation Between Momentum Group and AAC Clyde
Can any of the company-specific risk be diversified away by investing in both Momentum 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 Momentum 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 Momentum Group AB and AAC Clyde Space, you can compare the effects of market volatilities on Momentum 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 Momentum Group with a short position of AAC Clyde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentum Group and AAC Clyde.
Diversification Opportunities for Momentum Group and AAC Clyde
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Momentum and AAC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Momentum 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 Momentum 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 Momentum 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 Momentum Group i.e., Momentum Group and AAC Clyde go up and down completely randomly.
Pair Corralation between Momentum Group and AAC Clyde
Assuming the 90 days trading horizon Momentum Group AB is expected to under-perform the AAC Clyde. But the stock apears to be less risky and, when comparing its historical volatility, Momentum Group AB is 4.05 times less risky than AAC Clyde. The stock trades about -0.15 of its potential returns per unit of risk. The AAC Clyde Space is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,530 in AAC Clyde Space on August 27, 2024 and sell it today you would earn a total of 965.00 from holding AAC Clyde Space or generate 27.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Momentum Group AB vs. AAC Clyde Space
Performance |
| Timeline |
| Momentum Group AB |
| AAC Clyde Space |
Momentum Group and AAC Clyde Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentum Group and AAC Clyde
The main advantage of trading using opposite Momentum Group and AAC Clyde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentum 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.| Momentum Group vs. Indutrade AB | Momentum Group vs. Lifco AB | Momentum Group vs. Lagercrantz Group AB | Momentum Group vs. AddLife AB |
| AAC Clyde vs. aXichem AB | AAC Clyde vs. Gaming Corps AB | AAC Clyde vs. Cantargia AB | AAC Clyde vs. KABE Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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