Correlation Between Aerostar Bacau and Alro Slatina

Can any of the company-specific risk be diversified away by investing in both Aerostar Bacau and Alro Slatina 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 Aerostar Bacau and Alro Slatina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aerostar Bacau and Alro Slatina, you can compare the effects of market volatilities on Aerostar Bacau and Alro Slatina 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 Aerostar Bacau with a short position of Alro Slatina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerostar Bacau and Alro Slatina.

Diversification Opportunities for Aerostar Bacau and Alro Slatina

0.0

Correlation Coefficient

Aerostar Bacau  Alro Slatina

Pay attention - limited upside

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

Pair Corralation between Aerostar Bacau and Alro Slatina

Assuming the 90 days trading horizon Aerostar Bacau is expected to under-perform the Alro Slatina. In addition to that, Aerostar Bacau is 1.34 times more volatile than Alro Slatina. It trades about -0.04 of its total potential returns per unit of risk. Alro Slatina is currently generating about 0.05 per unit of volatility. If you would invest  150.00  in Alro Slatina on September 13, 2024 and sell it today you would earn a total of  6.00  from holding Alro Slatina or generate 4.0% return on investment over 90 days.

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

Aerostar Bacau  vs.  Alro Slatina

Aerostar Bacau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerostar Bacau has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aerostar Bacau is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Alro Slatina

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alro Slatina are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alro Slatina is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aerostar Bacau and Alro Slatina

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

The idea behind Aerostar Bacau and Alro Slatina 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.