Correlation Between Aldel Financial and Valmont Industries

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

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

Diversification Opportunities for Aldel Financial and Valmont Industries

-0.09

Correlation Coefficient

Aldel Financial  Valmont Industries

Good diversification

The 3 months correlation between Aldel and Valmont is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Valmont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmont Industries and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Valmont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmont Industries has no effect on the direction of Aldel Financial i.e., Aldel Financial and Valmont Industries go up and down completely randomly.

Pair Corralation between Aldel Financial and Valmont Industries

Given the investment horizon of 90 days Aldel Financial is expected to generate 1.12 times less return on investment than Valmont Industries. But when comparing it to its historical volatility, Aldel Financial II is 16.06 times less risky than Valmont Industries. It trades about 0.11 of its potential returns per unit of risk. Valmont Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  31,786  in Valmont Industries on October 6, 2024 and sell it today you would lose (805.00) from holding Valmont Industries or give up 2.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.95%
Values	Daily Returns

Aldel Financial II  vs.  Valmont Industries

Aldel Financial II

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Valmont Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valmont Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal primary indicators, Valmont Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aldel Financial and Valmont Industries

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

The idea behind Aldel Financial II and Valmont Industries 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.