Correlation Between Aldel Financial and Noble Plc

Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Noble Plc 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 Noble Plc 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 Noble plc, you can compare the effects of market volatilities on Aldel Financial and Noble Plc 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 Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Noble Plc.

Diversification Opportunities for Aldel Financial and Noble Plc

-0.67

Correlation Coefficient

Aldel Financial  Noble Plc

Excellent diversification

The 3 months correlation between Aldel and Noble is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Aldel Financial i.e., Aldel Financial and Noble Plc go up and down completely randomly.

Pair Corralation between Aldel Financial and Noble Plc

Assuming the 90 days horizon Aldel Financial II is expected to generate 0.09 times more return on investment than Noble Plc. However, Aldel Financial II is 10.97 times less risky than Noble Plc. It trades about 0.14 of its potential returns per unit of risk. Noble plc is currently generating about -0.1 per unit of risk. If you would invest  1,004  in Aldel Financial II on December 26, 2024 and sell it today you would earn a total of  21.00  from holding Aldel Financial II or generate 2.09% return on investment over 90 days.

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

Aldel Financial II  vs.  Noble plc

Aldel Financial II

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Noble plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aldel Financial and Noble Plc

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

The idea behind Aldel Financial II and Noble plc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.