Correlation Between Aptitude Software and Bank of Ireland

Can any of the company-specific risk be diversified away by investing in both Aptitude Software and Bank of Ireland 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 Aptitude Software and Bank of Ireland into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aptitude Software and Bank of Ireland

0.06

Correlation Coefficient

Aptitude Software  Bank of Ireland

Significant diversification

The 3 months correlation between Aptitude and Bank is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aptitude Software Group and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland and Aptitude Software 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 Aptitude Software Group are associated (or correlated) with Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Aptitude Software i.e., Aptitude Software and Bank of Ireland go up and down completely randomly.

Pair Corralation between Aptitude Software and Bank of Ireland

Assuming the 90 days trading horizon Aptitude Software Group is expected to under-perform the Bank of Ireland. But the stock apears to be less risky and, when comparing its historical volatility, Aptitude Software Group is 1.22 times less risky than Bank of Ireland. The stock trades about -0.07 of its potential returns per unit of risk. The Bank of Ireland is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  866.00  in Bank of Ireland on October 11, 2024 and sell it today you would earn a total of  5.00  from holding Bank of Ireland or generate 0.58% return on investment over 90 days.

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

Aptitude Software Group  vs.  Bank of Ireland

Aptitude Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptitude Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aptitude Software is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bank of Ireland is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aptitude Software and Bank of Ireland

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

The idea behind Aptitude Software Group and Bank of Ireland 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.