Correlation Between Aldel Financial and SFL

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

Diversification Opportunities for Aldel Financial and SFL

AldelSFLDiversified AwayAldelSFLDiversified Away100%
0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aldel and SFL is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Aldel Financial i.e., Aldel Financial and SFL go up and down completely randomly.

Pair Corralation between Aldel Financial and SFL

Assuming the 90 days horizon Aldel Financial II is expected to generate 0.08 times more return on investment than SFL. However, Aldel Financial II is 12.82 times less risky than SFL. It trades about 0.05 of its potential returns per unit of risk. SFL Corporation is currently generating about -0.13 per unit of risk. If you would invest  999.00  in Aldel Financial II on September 14, 2024 and sell it today you would earn a total of  2.00  from holding Aldel Financial II or generate 0.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy57.81%
ValuesDaily Returns

Aldel Financial II  vs.  SFL Corp.

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -50510
JavaScript chart by amCharts 3.21.15ALDFU SFL
       Timeline  
Aldel Financial II 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 4 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15Oct 28Nov 04Nov 11Nov 18Nov 25Dec 02Dec 09 Nov 11Nov 18Nov 25Dec 02Dec 099.989.991010.0110.0210.03
SFL Corporation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1010.51111.5

Aldel Financial and SFL Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.19-0.0842-0.0574-0.0294-0.0013360.02660.05610.08560.20.41 5101520253035
JavaScript chart by amCharts 3.21.15ALDFU SFL
       Returns  

Pair Trading with Aldel Financial and SFL

The main advantage of trading using opposite Aldel Financial and SFL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, SFL 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 SFL will offset losses from the drop in SFL's long position.
The idea behind Aldel Financial II and SFL Corporation 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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