Correlation Between Aclara Resources and Descartes Systems

Can any of the company-specific risk be diversified away by investing in both Aclara Resources and Descartes Systems 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 Aclara Resources and Descartes Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aclara Resources and Descartes Systems

-0.07

Correlation Coefficient

Aclara Resources  Descartes Systems

Good diversification

The 3 months correlation between Aclara and Descartes is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aclara Resources and Descartes Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Descartes Systems and Aclara Resources 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 Aclara Resources are associated (or correlated) with Descartes Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Descartes Systems has no effect on the direction of Aclara Resources i.e., Aclara Resources and Descartes Systems go up and down completely randomly.

Pair Corralation between Aclara Resources and Descartes Systems

Assuming the 90 days trading horizon Aclara Resources is expected to generate 2.21 times more return on investment than Descartes Systems. However, Aclara Resources is 2.21 times more volatile than Descartes Systems Group. It trades about 0.08 of its potential returns per unit of risk. Descartes Systems Group is currently generating about -0.1 per unit of risk. If you would invest  45.00  in Aclara Resources on December 31, 2024 and sell it today you would earn a total of  7.00  from holding Aclara Resources or generate 15.56% return on investment over 90 days.

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

Aclara Resources  vs.  Descartes Systems Group

Aclara Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aclara Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aclara Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Descartes Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Descartes Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aclara Resources and Descartes Systems

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

The idea behind Aclara Resources and Descartes Systems Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.