Correlation Between Aimia and Dream Impact

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

By analyzing existing cross correlation between Aimia Inc and Dream Impact Trust, you can compare the effects of market volatilities on Aimia and Dream Impact 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 Dream Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Dream Impact.

Diversification Opportunities for Aimia and Dream Impact

-0.47

Correlation Coefficient

Aimia  Dream Impact

Very good diversification

The 3 months correlation between Aimia and Dream is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Dream Impact Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Impact Trust 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 Dream Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Impact Trust has no effect on the direction of Aimia i.e., Aimia and Dream Impact go up and down completely randomly.

Pair Corralation between Aimia and Dream Impact

Assuming the 90 days trading horizon Aimia Inc is expected to generate 0.74 times more return on investment than Dream Impact. However, Aimia Inc is 1.35 times less risky than Dream Impact. It trades about 0.02 of its potential returns per unit of risk. Dream Impact Trust is currently generating about -0.12 per unit of risk. If you would invest  267.00  in Aimia Inc on October 6, 2024 and sell it today you would earn a total of  1.00  from holding Aimia Inc or generate 0.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Aimia Inc  vs.  Dream Impact Trust

Aimia Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aimia Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Aimia is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Dream Impact Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aimia and Dream Impact

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

The idea behind Aimia Inc and Dream Impact Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.