Correlation Between McDonalds and AOT Growth

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

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

Diversification Opportunities for McDonalds and AOT Growth

-0.42

Correlation Coefficient

McDonalds  AOT Growth

Very good diversification

The 3 months correlation between McDonalds and AOT is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and AOT Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOT Growth and McDonalds 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 McDonalds are associated (or correlated) with AOT Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOT Growth has no effect on the direction of McDonalds i.e., McDonalds and AOT Growth go up and down completely randomly.

Pair Corralation between McDonalds and AOT Growth

Considering the 90-day investment horizon McDonalds is expected to under-perform the AOT Growth. But the stock apears to be less risky and, when comparing its historical volatility, McDonalds is 1.27 times less risky than AOT Growth. The stock trades about -0.09 of its potential returns per unit of risk. The AOT Growth and is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  4,178  in AOT Growth and on May 7, 2025 and sell it today you would earn a total of  993.00  from holding AOT Growth and or generate 23.77% return on investment over 90 days.

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

McDonalds  vs.  AOT Growth and

McDonalds

Risk-Adjusted Performance

Weakest

Over the last 90 days McDonalds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, McDonalds is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

AOT Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AOT Growth and are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, AOT Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McDonalds and AOT Growth

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

The idea behind McDonalds and AOT Growth and 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.