Correlation Between Ageagle Aerial and Desktop Metal

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

By analyzing existing cross correlation between Ageagle Aerial Systems and Desktop Metal, you can compare the effects of market volatilities on Ageagle Aerial and Desktop Metal 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 Ageagle Aerial with a short position of Desktop Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ageagle Aerial and Desktop Metal.

Diversification Opportunities for Ageagle Aerial and Desktop Metal

-0.36

Correlation Coefficient

Ageagle Aerial  Desktop Metal

Very good diversification

The 3 months correlation between Ageagle and Desktop is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ageagle Aerial Systems and Desktop Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desktop Metal and Ageagle Aerial 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 Ageagle Aerial Systems are associated (or correlated) with Desktop Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desktop Metal has no effect on the direction of Ageagle Aerial i.e., Ageagle Aerial and Desktop Metal go up and down completely randomly.

Pair Corralation between Ageagle Aerial and Desktop Metal

Given the investment horizon of 90 days Ageagle Aerial Systems is expected to generate 8.57 times more return on investment than Desktop Metal. However, Ageagle Aerial is 8.57 times more volatile than Desktop Metal. It trades about 0.07 of its potential returns per unit of risk. Desktop Metal is currently generating about 0.0 per unit of risk. If you would invest  1,600  in Ageagle Aerial Systems on September 2, 2024 and sell it today you would lose (730.00) from holding Ageagle Aerial Systems or give up 45.63% of portfolio value over 90 days.

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

Ageagle Aerial Systems  vs.  Desktop Metal

Ageagle Aerial Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ageagle Aerial Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Ageagle Aerial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Desktop Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Desktop Metal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ageagle Aerial and Desktop Metal

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

The idea behind Ageagle Aerial Systems and Desktop Metal 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.