Correlation Between LB Foster and AER Energy

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

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

Diversification Opportunities for LB Foster and AER Energy

0.0

Correlation Coefficient

LB Foster  AER Energy

Pay attention - limited upside

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

Pair Corralation between LB Foster and AER Energy

If you would invest  0.00  in AER Energy Resources on December 27, 2024 and sell it today you would earn a total of  0.00  from holding AER Energy Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

LB Foster  vs.  AER Energy Resources

LB Foster

Risk-Adjusted Performance

Very Weak

Over the last 90 days LB Foster has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AER Energy Resources

Risk-Adjusted Performance

OK

Over the last 90 days AER Energy Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AER Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LB Foster and AER Energy

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

The idea behind LB Foster and AER Energy Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.