Correlation Between Aimia and High Tide

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

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

Diversification Opportunities for Aimia and High Tide

0.1

Correlation Coefficient

Aimia  High Tide

Average diversification

The 3 months correlation between Aimia and High is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and High Tide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tide and Aimia 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 Aimia Inc are associated (or correlated) with High Tide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tide has no effect on the direction of Aimia i.e., Aimia and High Tide go up and down completely randomly.

Pair Corralation between Aimia and High Tide

Assuming the 90 days trading horizon Aimia is expected to generate 1.11 times less return on investment than High Tide. But when comparing it to its historical volatility, Aimia Inc is 2.39 times less risky than High Tide. It trades about 0.2 of its potential returns per unit of risk. High Tide is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  405.00  in High Tide on September 24, 2024 and sell it today you would earn a total of  28.00  from holding High Tide or generate 6.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aimia Inc  vs.  High Tide

Aimia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aimia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Aimia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

High Tide

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in High Tide are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, High Tide showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aimia and High Tide

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

The idea behind Aimia Inc and High Tide 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.