Correlation Between AAC Clyde and Vertical Aerospace

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

Diversification Opportunities for AAC Clyde and Vertical Aerospace

0.13

Correlation Coefficient

AAC Clyde  Vertical Aerospace

Average diversification

The 3 months correlation between AAC and Vertical is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace 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 Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of AAC Clyde i.e., AAC Clyde and Vertical Aerospace go up and down completely randomly.

Pair Corralation between AAC Clyde and Vertical Aerospace

Assuming the 90 days horizon AAC Clyde Space is expected to under-perform the Vertical Aerospace. But the otc stock apears to be less risky and, when comparing its historical volatility, AAC Clyde Space is 34.52 times less risky than Vertical Aerospace. The otc stock trades about -0.14 of its potential returns per unit of risk. The Vertical Aerospace is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  461.00  in Vertical Aerospace on September 16, 2024 and sell it today you would earn a total of  310.00  from holding Vertical Aerospace or generate 67.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

AAC Clyde Space  vs.  Vertical Aerospace

AAC Clyde Space

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, AAC Clyde reported solid returns over the last few months and may actually be approaching a breakup point.

Vertical Aerospace

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vertical Aerospace are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Vertical Aerospace disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAC Clyde and Vertical Aerospace

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

The idea behind AAC Clyde Space and Vertical Aerospace 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.