Correlation Between Aiadvertising and Pennexx Foods

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

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

Diversification Opportunities for Aiadvertising and Pennexx Foods

-0.44

Correlation Coefficient

Aiadvertising  Pennexx Foods

Very good diversification

The 3 months correlation between Aiadvertising and Pennexx is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aiadvertising and Pennexx Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennexx Foods and Aiadvertising 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 Aiadvertising are associated (or correlated) with Pennexx Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennexx Foods has no effect on the direction of Aiadvertising i.e., Aiadvertising and Pennexx Foods go up and down completely randomly.

Pair Corralation between Aiadvertising and Pennexx Foods

Given the investment horizon of 90 days Aiadvertising is expected to generate 2.75 times more return on investment than Pennexx Foods. However, Aiadvertising is 2.75 times more volatile than Pennexx Foods. It trades about 0.17 of its potential returns per unit of risk. Pennexx Foods is currently generating about -0.1 per unit of risk. If you would invest  0.13  in Aiadvertising on October 26, 2024 and sell it today you would earn a total of  0.34  from holding Aiadvertising or generate 261.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aiadvertising  vs.  Pennexx Foods

Aiadvertising

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aiadvertising are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Aiadvertising exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pennexx Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennexx Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aiadvertising and Pennexx Foods

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

The idea behind Aiadvertising and Pennexx Foods 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.