Correlation Between AIC Mines and London City

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

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

Diversification Opportunities for AIC Mines and London City

-0.57

Correlation Coefficient

AIC Mines  London City

Excellent diversification

The 3 months correlation between AIC and London is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AIC Mines Limited and London City Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London City Equities and AIC Mines 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 AIC Mines Limited are associated (or correlated) with London City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London City Equities has no effect on the direction of AIC Mines i.e., AIC Mines and London City go up and down completely randomly.

Pair Corralation between AIC Mines and London City

Assuming the 90 days trading horizon AIC Mines Limited is expected to under-perform the London City. In addition to that, AIC Mines is 5.18 times more volatile than London City Equities. It trades about -0.06 of its total potential returns per unit of risk. London City Equities is currently generating about 0.35 per unit of volatility. If you would invest  71.00  in London City Equities on September 28, 2024 and sell it today you would earn a total of  12.00  from holding London City Equities or generate 16.9% return on investment over 90 days.

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

AIC Mines Limited  vs.  London City Equities

AIC Mines Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIC Mines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

London City Equities

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in London City Equities are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, London City unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIC Mines and London City

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

The idea behind AIC Mines Limited and London City Equities 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.