Correlation Between AAC Clyde and Enad Global

Can any of the company-specific risk be diversified away by investing in both AAC Clyde and Enad Global 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 AAC Clyde and Enad Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AAC Clyde Space and Enad Global 7, you can compare the effects of market volatilities on AAC Clyde and Enad Global 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 AAC Clyde with a short position of Enad Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and Enad Global.

Diversification Opportunities for AAC Clyde and Enad Global

0.35

Correlation Coefficient

AAC Clyde  Enad Global

Weak diversification

The 3 months correlation between AAC and Enad is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Enad Global 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enad Global 7 and AAC Clyde 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 AAC Clyde Space are associated (or correlated) with Enad Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enad Global 7 has no effect on the direction of AAC Clyde i.e., AAC Clyde and Enad Global go up and down completely randomly.

Pair Corralation between AAC Clyde and Enad Global

Assuming the 90 days trading horizon AAC Clyde is expected to generate 2.14 times less return on investment than Enad Global. But when comparing it to its historical volatility, AAC Clyde Space is 1.25 times less risky than Enad Global. It trades about 0.19 of its potential returns per unit of risk. Enad Global 7 is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,281  in Enad Global 7 on September 21, 2024 and sell it today you would earn a total of  292.00  from holding Enad Global 7 or generate 22.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

AAC Clyde Space  vs.  Enad Global 7

AAC Clyde Space

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, AAC Clyde unveiled solid returns over the last few months and may actually be approaching a breakup point.

Enad Global 7

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enad Global 7 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enad Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AAC Clyde and Enad Global

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

The idea behind AAC Clyde Space and Enad Global 7 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.