Correlation Between AIM ImmunoTech and Flowtech Fluidpower

Can any of the company-specific risk be diversified away by investing in both AIM ImmunoTech and Flowtech Fluidpower 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 AIM ImmunoTech and Flowtech Fluidpower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AIM ImmunoTech and Flowtech Fluidpower plc, you can compare the effects of market volatilities on AIM ImmunoTech and Flowtech Fluidpower 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 AIM ImmunoTech with a short position of Flowtech Fluidpower. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ImmunoTech and Flowtech Fluidpower.

Diversification Opportunities for AIM ImmunoTech and Flowtech Fluidpower

0.77

Correlation Coefficient

AIM ImmunoTech  Flowtech Fluidpower

Poor diversification

The 3 months correlation between AIM and Flowtech is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AIM ImmunoTech and Flowtech Fluidpower plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowtech Fluidpower plc and AIM ImmunoTech 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 AIM ImmunoTech are associated (or correlated) with Flowtech Fluidpower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowtech Fluidpower plc has no effect on the direction of AIM ImmunoTech i.e., AIM ImmunoTech and Flowtech Fluidpower go up and down completely randomly.

Pair Corralation between AIM ImmunoTech and Flowtech Fluidpower

Assuming the 90 days trading horizon AIM ImmunoTech is expected to generate 1.55 times more return on investment than Flowtech Fluidpower. However, AIM ImmunoTech is 1.55 times more volatile than Flowtech Fluidpower plc. It trades about -0.05 of its potential returns per unit of risk. Flowtech Fluidpower plc is currently generating about -0.14 per unit of risk. If you would invest  29.00  in AIM ImmunoTech on September 12, 2024 and sell it today you would lose (6.00) from holding AIM ImmunoTech or give up 20.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AIM ImmunoTech  vs.  Flowtech Fluidpower plc

AIM ImmunoTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIM ImmunoTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Flowtech Fluidpower plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flowtech Fluidpower plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AIM ImmunoTech and Flowtech Fluidpower

The main advantage of trading using opposite AIM ImmunoTech and Flowtech Fluidpower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM ImmunoTech position performs unexpectedly, Flowtech Fluidpower 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 Flowtech Fluidpower will offset losses from the drop in Flowtech Fluidpower's long position.

The idea behind AIM ImmunoTech and Flowtech Fluidpower plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.