Correlation Between Aldel Financial and Sabre Corpo

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

Diversification Opportunities for Aldel Financial and Sabre Corpo

0.36

Correlation Coefficient

Aldel Financial  Sabre Corpo

Weak diversification

The 3 months correlation between Aldel and Sabre is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo 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 Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of Aldel Financial i.e., Aldel Financial and Sabre Corpo go up and down completely randomly.

Pair Corralation between Aldel Financial and Sabre Corpo

Assuming the 90 days horizon Aldel Financial II is expected to generate 0.06 times more return on investment than Sabre Corpo. However, Aldel Financial II is 17.81 times less risky than Sabre Corpo. It trades about 0.11 of its potential returns per unit of risk. Sabre Corpo is currently generating about -0.01 per unit of risk. If you would invest  1,010  in Aldel Financial II on December 28, 2024 and sell it today you would earn a total of  15.00  from holding Aldel Financial II or generate 1.49% return on investment over 90 days.

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

Aldel Financial II  vs.  Sabre Corpo

Aldel Financial II

Risk-Adjusted Performance

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. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sabre Corpo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabre Corpo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Sabre Corpo is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aldel Financial and Sabre Corpo

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

The idea behind Aldel Financial II and Sabre Corpo 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.