Correlation Between Alligo AB and AQ Group

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

By analyzing existing cross correlation between Alligo AB Series and AQ Group AB, you can compare the effects of market volatilities on Alligo AB and AQ Group 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 Alligo AB with a short position of AQ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alligo AB and AQ Group.

Diversification Opportunities for Alligo AB and AQ Group

0.68

Correlation Coefficient

Alligo AB  AQ Group

Poor diversification

The 3 months correlation between Alligo and AQ Group is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alligo AB Series and AQ Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AQ Group AB and Alligo AB 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 Alligo AB Series are associated (or correlated) with AQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AQ Group AB has no effect on the direction of Alligo AB i.e., Alligo AB and AQ Group go up and down completely randomly.

Pair Corralation between Alligo AB and AQ Group

Assuming the 90 days trading horizon Alligo AB is expected to generate 1.55 times less return on investment than AQ Group. In addition to that, Alligo AB is 1.0 times more volatile than AQ Group AB. It trades about 0.1 of its total potential returns per unit of risk. AQ Group AB is currently generating about 0.16 per unit of volatility. If you would invest  13,818  in AQ Group AB on December 25, 2024 and sell it today you would earn a total of  3,376  from holding AQ Group AB or generate 24.43% return on investment over 90 days.

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

Alligo AB Series  vs.  AQ Group AB

Alligo AB Series

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alligo AB Series are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Alligo AB sustained solid returns over the last few months and may actually be approaching a breakup point.

AQ Group AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AQ Group AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AQ Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alligo AB and AQ Group

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

The idea behind Alligo AB Series and AQ Group AB 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.