Correlation Between Aristocrat Group and Andrew Peller

Can any of the company-specific risk be diversified away by investing in both Aristocrat Group and Andrew Peller 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 Aristocrat Group and Andrew Peller into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aristocrat Group Corp and Andrew Peller Limited, you can compare the effects of market volatilities on Aristocrat Group and Andrew Peller 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 Aristocrat Group with a short position of Andrew Peller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Group and Andrew Peller.

Diversification Opportunities for Aristocrat Group and Andrew Peller

0.32

Correlation Coefficient

Aristocrat Group  Andrew Peller

Weak diversification

The 3 months correlation between Aristocrat and Andrew is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Group Corp and Andrew Peller Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andrew Peller Limited and Aristocrat Group 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 Aristocrat Group Corp are associated (or correlated) with Andrew Peller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andrew Peller Limited has no effect on the direction of Aristocrat Group i.e., Aristocrat Group and Andrew Peller go up and down completely randomly.

Pair Corralation between Aristocrat Group and Andrew Peller

Given the investment horizon of 90 days Aristocrat Group Corp is expected to generate 7.8 times more return on investment than Andrew Peller. However, Aristocrat Group is 7.8 times more volatile than Andrew Peller Limited. It trades about 0.09 of its potential returns per unit of risk. Andrew Peller Limited is currently generating about -0.02 per unit of risk. If you would invest  0.95  in Aristocrat Group Corp on September 13, 2024 and sell it today you would earn a total of  0.42  from holding Aristocrat Group Corp or generate 44.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.19%
Values	Daily Returns

Aristocrat Group Corp  vs.  Andrew Peller Limited

Aristocrat Group Corp

Risk-Adjusted Performance

6 of 100

Very Weak

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

Andrew Peller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andrew Peller Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Andrew Peller is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aristocrat Group and Andrew Peller

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

The idea behind Aristocrat Group Corp and Andrew Peller Limited 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.