Correlation Between 2S Metal and AIM Industrial

Can any of the company-specific risk be diversified away by investing in both 2S Metal and AIM Industrial 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 2S Metal and AIM Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 2S Metal Public and AIM Industrial Growth, you can compare the effects of market volatilities on 2S Metal and AIM Industrial 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 2S Metal with a short position of AIM Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and AIM Industrial.

Diversification Opportunities for 2S Metal and AIM Industrial

-0.4

Correlation Coefficient

2S Metal  AIM Industrial

Very good diversification

The 3 months correlation between 2S Metal and AIM is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and AIM Industrial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Industrial Growth and 2S Metal 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 2S Metal Public are associated (or correlated) with AIM Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Industrial Growth has no effect on the direction of 2S Metal i.e., 2S Metal and AIM Industrial go up and down completely randomly.

Pair Corralation between 2S Metal and AIM Industrial

Assuming the 90 days horizon 2S Metal Public is expected to under-perform the AIM Industrial. In addition to that, 2S Metal is 2.31 times more volatile than AIM Industrial Growth. It trades about -0.13 of its total potential returns per unit of risk. AIM Industrial Growth is currently generating about 0.03 per unit of volatility. If you would invest  1,050  in AIM Industrial Growth on December 5, 2024 and sell it today you would earn a total of  10.00  from holding AIM Industrial Growth or generate 0.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

2S Metal Public  vs.  AIM Industrial Growth

2S Metal Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days 2S Metal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AIM Industrial Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AIM Industrial Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, AIM Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 2S Metal and AIM Industrial

The main advantage of trading using opposite 2S Metal and AIM Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, AIM Industrial 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 AIM Industrial will offset losses from the drop in AIM Industrial's long position.

The idea behind 2S Metal Public and AIM Industrial Growth 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..