Correlation Between Aerostar Bacau and Artego Tg

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

By analyzing existing cross correlation between Aerostar Bacau and Artego Tg Jiu, you can compare the effects of market volatilities on Aerostar Bacau and Artego Tg 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 Artego Tg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerostar Bacau and Artego Tg.

Diversification Opportunities for Aerostar Bacau and Artego Tg

-0.35

Correlation Coefficient

Aerostar Bacau  Artego Tg

Very good diversification

The 3 months correlation between Aerostar and Artego is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aerostar Bacau and Artego Tg Jiu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artego Tg Jiu 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 Artego Tg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artego Tg Jiu has no effect on the direction of Aerostar Bacau i.e., Aerostar Bacau and Artego Tg go up and down completely randomly.

Pair Corralation between Aerostar Bacau and Artego Tg

Assuming the 90 days trading horizon Aerostar Bacau is expected to generate 0.64 times more return on investment than Artego Tg. However, Aerostar Bacau is 1.56 times less risky than Artego Tg. It trades about 0.1 of its potential returns per unit of risk. Artego Tg Jiu is currently generating about -0.04 per unit of risk. If you would invest  848.00  in Aerostar Bacau on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Aerostar Bacau or generate 11.79% return on investment over 90 days.

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

Aerostar Bacau  vs.  Artego Tg Jiu

Aerostar Bacau

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aerostar Bacau are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aerostar Bacau displayed solid returns over the last few months and may actually be approaching a breakup point.

Artego Tg Jiu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artego Tg Jiu has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic 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 Aerostar Bacau and Artego Tg

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

The idea behind Aerostar Bacau and Artego Tg Jiu 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.