Correlation Between AAC Clyde and Embellence Group

Can any of the company-specific risk be diversified away by investing in both AAC Clyde and Embellence Group 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 Embellence Group 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 Embellence Group AB, you can compare the effects of market volatilities on AAC Clyde and Embellence Group 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 Embellence Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and Embellence Group.

Diversification Opportunities for AAC Clyde and Embellence Group

-0.71

Correlation Coefficient

AAC Clyde  Embellence Group

Pay attention - limited upside

The 3 months correlation between AAC and Embellence is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Embellence Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embellence Group 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 Embellence Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embellence Group has no effect on the direction of AAC Clyde i.e., AAC Clyde and Embellence Group go up and down completely randomly.

Pair Corralation between AAC Clyde and Embellence Group

Assuming the 90 days trading horizon AAC Clyde Space is expected to generate 2.55 times more return on investment than Embellence Group. However, AAC Clyde is 2.55 times more volatile than Embellence Group AB. It trades about 0.15 of its potential returns per unit of risk. Embellence Group AB is currently generating about -0.18 per unit of risk. If you would invest  3,460  in AAC Clyde Space on September 4, 2024 and sell it today you would earn a total of  1,380  from holding AAC Clyde Space or generate 39.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

AAC Clyde Space  vs.  Embellence Group AB

AAC Clyde Space

Risk-Adjusted Performance

11 of 100

Good

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 weak fundamental indicators, AAC Clyde unveiled solid returns over the last few months and may actually be approaching a breakup point.

Embellence Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embellence Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AAC Clyde and Embellence Group

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

The idea behind AAC Clyde Space and Embellence Group AB 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.