Correlation Between Cloud Technologies and Ailleron

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

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

Diversification Opportunities for Cloud Technologies and Ailleron

0.01

Correlation Coefficient

Cloud Technologies  Ailleron

Significant diversification

The 3 months correlation between Cloud and Ailleron is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Technologies SA and Ailleron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ailleron SA and Cloud Technologies 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 Cloud Technologies SA are associated (or correlated) with Ailleron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ailleron SA has no effect on the direction of Cloud Technologies i.e., Cloud Technologies and Ailleron go up and down completely randomly.

Pair Corralation between Cloud Technologies and Ailleron

Assuming the 90 days trading horizon Cloud Technologies SA is expected to under-perform the Ailleron. In addition to that, Cloud Technologies is 1.38 times more volatile than Ailleron SA. It trades about -0.01 of its total potential returns per unit of risk. Ailleron SA is currently generating about 0.09 per unit of volatility. If you would invest  2,160  in Ailleron SA on December 28, 2024 and sell it today you would earn a total of  200.00  from holding Ailleron SA or generate 9.26% return on investment over 90 days.

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

Cloud Technologies SA  vs.  Ailleron SA

Cloud Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cloud Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cloud Technologies is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ailleron SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ailleron SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ailleron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cloud Technologies and Ailleron

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

The idea behind Cloud Technologies SA and Ailleron 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.