Correlation Between Philip Morris and Aldel Financial

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

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

Diversification Opportunities for Philip Morris and Aldel Financial

-0.03

Correlation Coefficient

Philip Morris  Aldel Financial

Good diversification

The 3 months correlation between Philip and Aldel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International 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 Philip Morris 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 Philip Morris International 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 Philip Morris i.e., Philip Morris and Aldel Financial go up and down completely randomly.

Pair Corralation between Philip Morris and Aldel Financial

Allowing for the 90-day total investment horizon Philip Morris International is expected to under-perform the Aldel Financial. In addition to that, Philip Morris is 6.95 times more volatile than Aldel Financial II. It trades about -0.27 of its total potential returns per unit of risk. Aldel Financial II is currently generating about 0.15 per unit of volatility. If you would invest  990.00  in Aldel Financial II on October 9, 2024 and sell it today you would earn a total of  3.00  from holding Aldel Financial II or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

Philip Morris International  vs.  Aldel Financial II

Philip Morris Intern

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Philip Morris is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Aldel Financial II

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Philip Morris and Aldel Financial

The main advantage of trading using opposite Philip Morris and Aldel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris 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 Philip Morris International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.