Correlation Between AE and 1inch

Can any of the company-specific risk be diversified away by investing in both AE and 1inch 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 AE and 1inch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AE and 1inch, you can compare the effects of market volatilities on AE and 1inch 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 AE with a short position of 1inch. Check out your portfolio center. Please also check ongoing floating volatility patterns of AE and 1inch.

Diversification Opportunities for AE and 1inch

0.81

Correlation Coefficient

AE  1inch

Very poor diversification

The 3 months correlation between AE and 1inch is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AE and 1inch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1inch and AE 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 AE are associated (or correlated) with 1inch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1inch has no effect on the direction of AE i.e., AE and 1inch go up and down completely randomly.

Pair Corralation between AE and 1inch

Assuming the 90 days horizon AE is expected to generate 1.87 times less return on investment than 1inch. In addition to that, AE is 1.15 times more volatile than 1inch. It trades about 0.1 of its total potential returns per unit of risk. 1inch is currently generating about 0.21 per unit of volatility. If you would invest  22.00  in 1inch on September 2, 2024 and sell it today you would earn a total of  22.00  from holding 1inch or generate 100.0% return on investment over 90 days.

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

AE  vs.  1inch

AE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AE are ranked lower than 7 (%) 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.

1inch

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 1inch are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, 1inch exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AE and 1inch

The main advantage of trading using opposite AE and 1inch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AE position performs unexpectedly, 1inch 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 1inch will offset losses from the drop in 1inch's long position.

The idea behind AE and 1inch 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.