Correlation Between Legends Business and Aerius International

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

By analyzing existing cross correlation between Legends Business Grp and Aerius International, you can compare the effects of market volatilities on Legends Business and Aerius International 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 Legends Business with a short position of Aerius International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legends Business and Aerius International.

Diversification Opportunities for Legends Business and Aerius International

0.0

Correlation Coefficient

Legends Business  Aerius International

Pay attention - limited upside

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

Pair Corralation between Legends Business and Aerius International

Given the investment horizon of 90 days Legends Business is expected to generate 6.89 times less return on investment than Aerius International. But when comparing it to its historical volatility, Legends Business Grp is 2.36 times less risky than Aerius International. It trades about 0.03 of its potential returns per unit of risk. Aerius International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.45  in Aerius International on December 2, 2024 and sell it today you would lose (0.23) from holding Aerius International or give up 51.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Legends Business Grp  vs.  Aerius International

Legends Business Grp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Legends Business Grp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Legends Business is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aerius International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aerius International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Aerius International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Legends Business and Aerius International

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

The idea behind Legends Business Grp and Aerius International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.