Correlation Between Aerostar Bacau and Evergent Investments

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

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

Diversification Opportunities for Aerostar Bacau and Evergent Investments

-0.51

Correlation Coefficient

Aerostar Bacau  Evergent Investments

Excellent diversification

The 3 months correlation between Aerostar and Evergent is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aerostar Bacau and Evergent Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergent Investments 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 Evergent Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergent Investments has no effect on the direction of Aerostar Bacau i.e., Aerostar Bacau and Evergent Investments go up and down completely randomly.

Pair Corralation between Aerostar Bacau and Evergent Investments

Assuming the 90 days trading horizon Aerostar Bacau is expected to generate 3.66 times more return on investment than Evergent Investments. However, Aerostar Bacau is 3.66 times more volatile than Evergent Investments SA. It trades about 0.1 of its potential returns per unit of risk. Evergent Investments SA is currently generating about -0.04 per unit of risk. If you would invest  842.00  in Aerostar Bacau on December 24, 2024 and sell it today you would earn a total of  88.00  from holding Aerostar Bacau or generate 10.45% return on investment over 90 days.

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

Aerostar Bacau  vs.  Evergent Investments SA

Aerostar Bacau

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aerostar Bacau are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aerostar Bacau may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Evergent Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evergent Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Evergent Investments 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 Evergent Investments

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

The idea behind Aerostar Bacau and Evergent Investments SA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.