Correlation Between InMode and AAC Clyde

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

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

Diversification Opportunities for InMode and AAC Clyde

0.74

Correlation Coefficient

InMode  AAC Clyde

Poor diversification

The 3 months correlation between InMode and AAC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding InMode and AAC Clyde Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Clyde Space and InMode 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 InMode are associated (or correlated) with AAC Clyde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Clyde Space has no effect on the direction of InMode i.e., InMode and AAC Clyde go up and down completely randomly.

Pair Corralation between InMode and AAC Clyde

Given the investment horizon of 90 days InMode is expected to generate 5.93 times more return on investment than AAC Clyde. However, InMode is 5.93 times more volatile than AAC Clyde Space. It trades about 0.04 of its potential returns per unit of risk. AAC Clyde Space is currently generating about -0.14 per unit of risk. If you would invest  1,801  in InMode on September 16, 2024 and sell it today you would earn a total of  25.00  from holding InMode or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

InMode  vs.  AAC Clyde Space

InMode

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, InMode may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AAC Clyde Space

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, AAC Clyde reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InMode and AAC Clyde

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

The idea behind InMode and AAC Clyde Space 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..