Correlation Between AIM Commercial and AIM Industrial

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

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

Diversification Opportunities for AIM Commercial and AIM Industrial

-0.78

Correlation Coefficient

AIM Commercial  AIM Industrial

Pay attention - limited upside

The 3 months correlation between AIM and AIM is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding AIM Commercial Growth and AIM Industrial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Industrial Growth and AIM Commercial 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 AIM Commercial Growth are associated (or correlated) with AIM Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Industrial Growth has no effect on the direction of AIM Commercial i.e., AIM Commercial and AIM Industrial go up and down completely randomly.

Pair Corralation between AIM Commercial and AIM Industrial

Assuming the 90 days trading horizon AIM Commercial Growth is expected to under-perform the AIM Industrial. In addition to that, AIM Commercial is 3.45 times more volatile than AIM Industrial Growth. It trades about -0.2 of its total potential returns per unit of risk. AIM Industrial Growth is currently generating about 0.03 per unit of volatility. If you would invest  1,039  in AIM Industrial Growth on December 29, 2024 and sell it today you would earn a total of  11.00  from holding AIM Industrial Growth or generate 1.06% return on investment over 90 days.

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

AIM Commercial Growth  vs.  AIM Industrial Growth

AIM Commercial Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days AIM Commercial Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AIM Industrial Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AIM Industrial Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, AIM Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AIM Commercial and AIM Industrial

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

The idea behind AIM Commercial Growth and AIM Industrial Growth 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .