Correlation Between AAC Clyde and HEICO

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

Diversification Opportunities for AAC Clyde and HEICO

0.55

Correlation Coefficient

AAC Clyde  HEICO

Very weak diversification

The 3 months correlation between AAC and HEICO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO 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 HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of AAC Clyde i.e., AAC Clyde and HEICO go up and down completely randomly.

Pair Corralation between AAC Clyde and HEICO

Assuming the 90 days horizon AAC Clyde Space is expected to generate 0.33 times more return on investment than HEICO. However, AAC Clyde Space is 3.07 times less risky than HEICO. It trades about -0.14 of its potential returns per unit of risk. HEICO is currently generating about -0.17 per unit of risk. If you would invest  415.00  in AAC Clyde Space on September 16, 2024 and sell it today you would lose (5.00) from holding AAC Clyde Space or give up 1.2% of portfolio value over 90 days.

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

AAC Clyde Space  vs.  HEICO

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.

HEICO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AAC Clyde and HEICO

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

The idea behind AAC Clyde Space and HEICO 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.