Correlation Between Alkyl Amines and Aerodrome

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

By analyzing existing cross correlation between Alkyl Amines Chemicals and Aerodrome Group, you can compare the effects of market volatilities on Alkyl Amines and Aerodrome 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 Alkyl Amines with a short position of Aerodrome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkyl Amines and Aerodrome.

Diversification Opportunities for Alkyl Amines and Aerodrome

-0.13

Correlation Coefficient

Alkyl Amines  Aerodrome

Good diversification

The 3 months correlation between Alkyl and Aerodrome is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alkyl Amines Chemicals and Aerodrome Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Group and Alkyl Amines 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 Alkyl Amines Chemicals are associated (or correlated) with Aerodrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Group has no effect on the direction of Alkyl Amines i.e., Alkyl Amines and Aerodrome go up and down completely randomly.

Pair Corralation between Alkyl Amines and Aerodrome

Assuming the 90 days trading horizon Alkyl Amines Chemicals is expected to under-perform the Aerodrome. But the stock apears to be less risky and, when comparing its historical volatility, Alkyl Amines Chemicals is 3.45 times less risky than Aerodrome. The stock trades about -0.05 of its potential returns per unit of risk. The Aerodrome Group is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  8,030  in Aerodrome Group on February 6, 2024 and sell it today you would earn a total of  2,770  from holding Aerodrome Group or generate 34.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.78%
Values	Daily Returns

Alkyl Amines Chemicals  vs.  Aerodrome Group

Alkyl Amines Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkyl Amines Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aerodrome Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aerodrome Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aerodrome sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkyl Amines and Aerodrome

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

The idea behind Alkyl Amines Chemicals and Aerodrome Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.