Correlation Between Astar and AECI

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

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

Diversification Opportunities for Astar and AECI

-0.78

Correlation Coefficient

Astar  AECI

Pay attention - limited upside

The 3 months correlation between Astar and AECI is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Astar and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI and Astar 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 Astar are associated (or correlated) with AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of Astar i.e., Astar and AECI go up and down completely randomly.

Pair Corralation between Astar and AECI

Assuming the 90 days trading horizon Astar is expected to under-perform the AECI. In addition to that, Astar is 7.39 times more volatile than AECI. It trades about -0.19 of its total potential returns per unit of risk. AECI is currently generating about 0.09 per unit of volatility. If you would invest  145,000  in AECI on December 21, 2024 and sell it today you would earn a total of  5,000  from holding AECI or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Astar  vs.  AECI

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

AECI

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AECI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AECI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Astar and AECI

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

The idea behind Astar and AECI 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..