Correlation Between Investment and Aldel Financial

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

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

Diversification Opportunities for Investment and Aldel Financial

0.0

Correlation Coefficient

Investment  Aldel Financial

Pay attention - limited upside

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

Pair Corralation between Investment and Aldel Financial

Assuming the 90 days horizon Investment is expected to generate 21.03 times less return on investment than Aldel Financial. But when comparing it to its historical volatility, Investment AB Latour is 3.65 times less risky than Aldel Financial. It trades about 0.08 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Aldel Financial II on October 9, 2024 and sell it today you would earn a total of  10.00  from holding Aldel Financial II or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.67%
Values	Daily Returns

Investment AB Latour  vs.  Aldel Financial II

Investment AB Latour

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment AB Latour has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aldel Financial II

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Aldel Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investment and Aldel Financial

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

The idea behind Investment AB Latour and Aldel Financial II 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..