Correlation Between A1 Investments and London City

Can any of the company-specific risk be diversified away by investing in both A1 Investments and London City 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 A1 Investments and London City into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A1 Investments Resources and London City Equities, you can compare the effects of market volatilities on A1 Investments and London City 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 A1 Investments with a short position of London City. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1 Investments and London City.

Diversification Opportunities for A1 Investments and London City

0.0

Correlation Coefficient

A1 Investments  London City

Pay attention - limited upside

The 3 months correlation between AYI and London is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding A1 Investments Resources and London City Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London City Equities and A1 Investments 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 A1 Investments Resources are associated (or correlated) with London City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London City Equities has no effect on the direction of A1 Investments i.e., A1 Investments and London City go up and down completely randomly.

Pair Corralation between A1 Investments and London City

Assuming the 90 days trading horizon A1 Investments is expected to generate 1.03 times less return on investment than London City. In addition to that, A1 Investments is 3.57 times more volatile than London City Equities. It trades about 0.02 of its total potential returns per unit of risk. London City Equities is currently generating about 0.07 per unit of volatility. If you would invest  52.00  in London City Equities on October 10, 2024 and sell it today you would earn a total of  31.00  from holding London City Equities or generate 59.62% return on investment over 90 days.

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

A1 Investments Resources  vs.  London City Equities

A1 Investments Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A1 Investments Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, A1 Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

London City Equities

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in London City Equities are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, London City unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with A1 Investments and London City

The main advantage of trading using opposite A1 Investments and London City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1 Investments position performs unexpectedly, London City 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 London City will offset losses from the drop in London City's long position.

The idea behind A1 Investments Resources and London City Equities 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.