Correlation Between AAC Clyde and Humble Group

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

Diversification Opportunities for AAC Clyde and Humble Group

-0.54

Correlation Coefficient

AAC Clyde  Humble Group

Excellent diversification

The 3 months correlation between AAC and Humble is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Humble Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humble Group AB 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 Humble Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humble Group AB has no effect on the direction of AAC Clyde i.e., AAC Clyde and Humble Group go up and down completely randomly.

Pair Corralation between AAC Clyde and Humble Group

Assuming the 90 days trading horizon AAC Clyde is expected to generate 2.08 times less return on investment than Humble Group. But when comparing it to its historical volatility, AAC Clyde Space is 1.3 times less risky than Humble Group. It trades about 0.19 of its potential returns per unit of risk. Humble Group AB is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Humble Group AB on September 21, 2024 and sell it today you would earn a total of  230.00  from holding Humble Group AB or generate 23.0% return on investment over 90 days.

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

AAC Clyde Space  vs.  Humble Group AB

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.

Humble Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humble Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Humble Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AAC Clyde and Humble Group

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

The idea behind AAC Clyde Space and Humble 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.