Correlation Between Skyline and Aldel Financial

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

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

Diversification Opportunities for Skyline and Aldel Financial

0.57

Correlation Coefficient

Skyline  Aldel Financial

Very weak diversification

The 3 months correlation between Skyline and Aldel is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Skyline 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 Skyline 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 Skyline 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 Skyline i.e., Skyline and Aldel Financial go up and down completely randomly.

Pair Corralation between Skyline and Aldel Financial

Considering the 90-day investment horizon Skyline is expected to under-perform the Aldel Financial. In addition to that, Skyline is 24.76 times more volatile than Aldel Financial II. It trades about -0.02 of its total potential returns per unit of risk. Aldel Financial II is currently generating about 0.22 per unit of volatility. If you would invest  992.00  in Aldel Financial II on December 19, 2024 and sell it today you would earn a total of  14.00  from holding Aldel Financial II or generate 1.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Skyline  vs.  Aldel Financial II

Skyline

Risk-Adjusted Performance

Very Weak

Over the last 90 days Skyline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Skyline is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aldel Financial II

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 17 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Skyline and Aldel Financial

The main advantage of trading using opposite Skyline and Aldel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyline 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 Skyline 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.