Correlation Between SWFTC and AE

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

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

Diversification Opportunities for SWFTC and AE

0.68

Correlation Coefficient

SWFTC  AE

Poor diversification

The 3 months correlation between SWFTC and AE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SWFTC and AE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AE and SWFTC 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 SWFTC are associated (or correlated) with AE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AE has no effect on the direction of SWFTC i.e., SWFTC and AE go up and down completely randomly.

Pair Corralation between SWFTC and AE

Assuming the 90 days trading horizon SWFTC is expected to under-perform the AE. But the crypto coin apears to be less risky and, when comparing its historical volatility, SWFTC is 6.06 times less risky than AE. The crypto coin trades about -0.23 of its potential returns per unit of risk. The AE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.71  in AE on July 26, 2025 and sell it today you would lose (0.17) from holding AE or give up 23.34% of portfolio value over 90 days.

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

SWFTC  vs.  AE

SWFTC

Risk-Adjusted Performance

Weakest

Over the last 90 days SWFTC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in November 2025. The latest tumult may also be a sign of longer-term up-swing for SWFTC shareholders.

AE

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in AE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, AE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SWFTC and AE

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

The idea behind SWFTC and AE 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.