Correlation Between AAC Clyde and Lilium NV

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

Diversification Opportunities for AAC Clyde and Lilium NV

-0.29

Correlation Coefficient

AAC Clyde  Lilium NV

Very good diversification

The 3 months correlation between AAC and Lilium is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space and Lilium NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium NV 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 Lilium NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium NV has no effect on the direction of AAC Clyde i.e., AAC Clyde and Lilium NV go up and down completely randomly.

Pair Corralation between AAC Clyde and Lilium NV

Assuming the 90 days horizon AAC Clyde Space is expected to generate 2.68 times more return on investment than Lilium NV. However, AAC Clyde is 2.68 times more volatile than Lilium NV. It trades about 0.05 of its potential returns per unit of risk. Lilium NV is currently generating about 0.03 per unit of risk. If you would invest  14.00  in AAC Clyde Space on December 5, 2024 and sell it today you would earn a total of  476.00  from holding AAC Clyde Space or generate 3400.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

AAC Clyde Space  vs.  Lilium NV

AAC Clyde Space

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, AAC Clyde reported solid returns over the last few months and may actually be approaching a breakup point.

Lilium NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lilium NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting essential indicators, Lilium NV displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAC Clyde and Lilium NV

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

The idea behind AAC Clyde Space and Lilium NV 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.