Correlation Between Archer Aviation and Lilium Equity

Can any of the company-specific risk be diversified away by investing in both Archer Aviation and Lilium Equity 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 Archer Aviation and Lilium Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Archer Aviation WT and Lilium Equity Warrants, you can compare the effects of market volatilities on Archer Aviation and Lilium Equity 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 Archer Aviation with a short position of Lilium Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and Lilium Equity.

Diversification Opportunities for Archer Aviation and Lilium Equity

-0.36

Correlation Coefficient

Archer Aviation  Lilium Equity

Very good diversification

The 3 months correlation between Archer and Lilium is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation WT and Lilium Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium Equity Warrants and Archer Aviation 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 Archer Aviation WT are associated (or correlated) with Lilium Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium Equity Warrants has no effect on the direction of Archer Aviation i.e., Archer Aviation and Lilium Equity go up and down completely randomly.

Pair Corralation between Archer Aviation and Lilium Equity

Assuming the 90 days trading horizon Archer Aviation WT is expected to generate 0.46 times more return on investment than Lilium Equity. However, Archer Aviation WT is 2.16 times less risky than Lilium Equity. It trades about 0.09 of its potential returns per unit of risk. Lilium Equity Warrants is currently generating about -0.16 per unit of risk. If you would invest  239.00  in Archer Aviation WT on October 24, 2024 and sell it today you would earn a total of  31.00  from holding Archer Aviation WT or generate 12.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.29%
Values	Daily Returns

Archer Aviation WT  vs.  Lilium Equity Warrants

Archer Aviation WT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation WT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Archer Aviation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lilium Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lilium Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Archer Aviation and Lilium Equity

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

The idea behind Archer Aviation WT and Lilium Equity Warrants 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.