Correlation Between AES and Fidelity Telecom

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

By analyzing existing cross correlation between The AES and Fidelity Telecom And, you can compare the effects of market volatilities on AES and Fidelity Telecom 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 AES with a short position of Fidelity Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Fidelity Telecom.

Diversification Opportunities for AES and Fidelity Telecom

-0.24

Correlation Coefficient

AES  Fidelity Telecom

Very good diversification

The 3 months correlation between AES and Fidelity is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Fidelity Telecom And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Telecom And and AES 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 The AES are associated (or correlated) with Fidelity Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Telecom And has no effect on the direction of AES i.e., AES and Fidelity Telecom go up and down completely randomly.

Pair Corralation between AES and Fidelity Telecom

Considering the 90-day investment horizon AES is expected to generate 2.79 times less return on investment than Fidelity Telecom. In addition to that, AES is 3.18 times more volatile than Fidelity Telecom And. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Telecom And is currently generating about 0.07 per unit of volatility. If you would invest  3,303  in Fidelity Telecom And on December 27, 2024 and sell it today you would earn a total of  122.00  from holding Fidelity Telecom And or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

The AES  vs.  Fidelity Telecom And

AES

Risk-Adjusted Performance

Very Weak

Over the last 90 days The AES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, AES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity Telecom And

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Telecom And are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AES and Fidelity Telecom

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

The idea behind The AES and Fidelity Telecom And 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.