Correlation Between Vestis and Aldel Financial

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

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

Diversification Opportunities for Vestis and Aldel Financial

0.39

Correlation Coefficient

Vestis  Aldel Financial

Weak diversification

The 3 months correlation between Vestis and Aldel is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vestis 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 Vestis 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 Vestis 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 Vestis i.e., Vestis and Aldel Financial go up and down completely randomly.

Pair Corralation between Vestis and Aldel Financial

Given the investment horizon of 90 days Vestis is expected to generate 7.12 times more return on investment than Aldel Financial. However, Vestis is 7.12 times more volatile than Aldel Financial II. It trades about 0.13 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.25 per unit of risk. If you would invest  1,570  in Vestis on October 26, 2024 and sell it today you would earn a total of  61.00  from holding Vestis or generate 3.89% return on investment over 90 days.

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

Vestis  vs.  Aldel Financial II

Vestis

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vestis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aldel Financial II

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vestis and Aldel Financial

The main advantage of trading using opposite Vestis and Aldel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestis 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 Vestis 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 Global Correlations module to find global opportunities by holding instruments from different markets.