Correlation Between Alpha En and Vertical Aerospace

Can any of the company-specific risk be diversified away by investing in both Alpha En and Vertical Aerospace 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 Alpha En and Vertical Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alpha En and Vertical Aerospace, you can compare the effects of market volatilities on Alpha En and Vertical Aerospace 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 Alpha En with a short position of Vertical Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha En and Vertical Aerospace.

Diversification Opportunities for Alpha En and Vertical Aerospace

0.0

Correlation Coefficient

Alpha En  Vertical Aerospace

Pay attention - limited upside

The 3 months correlation between Alpha and Vertical is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding alpha En and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace and Alpha En 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 alpha En are associated (or correlated) with Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of Alpha En i.e., Alpha En and Vertical Aerospace go up and down completely randomly.

Pair Corralation between Alpha En and Vertical Aerospace

If you would invest  742.00  in Vertical Aerospace on October 24, 2024 and sell it today you would earn a total of  187.00  from holding Vertical Aerospace or generate 25.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

alpha En  vs.  Vertical Aerospace

alpha En

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alpha En has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Alpha En is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Vertical Aerospace

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vertical Aerospace are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Vertical Aerospace disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha En and Vertical Aerospace

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

The idea behind alpha En and Vertical Aerospace 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..