Correlation Between AIM Commercial and President Bakery

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

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

Diversification Opportunities for AIM Commercial and President Bakery

-0.11

Correlation Coefficient

AIM Commercial  President Bakery

Good diversification

The 3 months correlation between AIM and President is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AIM Commercial Growth and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public and AIM Commercial 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 AIM Commercial Growth are associated (or correlated) with President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of AIM Commercial i.e., AIM Commercial and President Bakery go up and down completely randomly.

Pair Corralation between AIM Commercial and President Bakery

Assuming the 90 days trading horizon AIM Commercial Growth is expected to under-perform the President Bakery. In addition to that, AIM Commercial is 1.77 times more volatile than President Bakery Public. It trades about -0.01 of its total potential returns per unit of risk. President Bakery Public is currently generating about 0.0 per unit of volatility. If you would invest  6,000  in President Bakery Public on September 5, 2024 and sell it today you would lose (25.00) from holding President Bakery Public or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

AIM Commercial Growth  vs.  President Bakery Public

AIM Commercial Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIM Commercial Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, AIM Commercial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AIM Commercial and President Bakery

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

The idea behind AIM Commercial Growth and President Bakery Public 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.