Correlation Between Aages SA and Impact Develop

Can any of the company-specific risk be diversified away by investing in both Aages SA and Impact Develop 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 Aages SA and Impact Develop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aages SA and Impact Develop, you can compare the effects of market volatilities on Aages SA and Impact Develop 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 Aages SA with a short position of Impact Develop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aages SA and Impact Develop.

Diversification Opportunities for Aages SA and Impact Develop

0.72

Correlation Coefficient

Aages SA  Impact Develop

Poor diversification

The 3 months correlation between Aages and Impact is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aages SA and Impact Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Develop and Aages SA 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 Aages SA are associated (or correlated) with Impact Develop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Develop has no effect on the direction of Aages SA i.e., Aages SA and Impact Develop go up and down completely randomly.

Pair Corralation between Aages SA and Impact Develop

Assuming the 90 days trading horizon Aages SA is expected to generate 0.71 times more return on investment than Impact Develop. However, Aages SA is 1.41 times less risky than Impact Develop. It trades about -0.02 of its potential returns per unit of risk. Impact Develop is currently generating about -0.05 per unit of risk. If you would invest  690.00  in Aages SA on September 13, 2024 and sell it today you would lose (20.00) from holding Aages SA or give up 2.9% of portfolio value over 90 days.

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

Aages SA  vs.  Impact Develop

Aages SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aages SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Aages SA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Impact Develop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Develop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aages SA and Impact Develop

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

The idea behind Aages SA and Impact Develop 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.