Correlation Between AIM Industrial and Premier Technology

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

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

Diversification Opportunities for AIM Industrial and Premier Technology

0.61

Correlation Coefficient

AIM Industrial  Premier Technology

Poor diversification

The 3 months correlation between AIM and Premier is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AIM Industrial Growth and Premier Technology Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Technology Public and AIM Industrial 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 Industrial Growth are associated (or correlated) with Premier Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Technology Public has no effect on the direction of AIM Industrial i.e., AIM Industrial and Premier Technology go up and down completely randomly.

Pair Corralation between AIM Industrial and Premier Technology

Assuming the 90 days trading horizon AIM Industrial Growth is expected to generate 0.98 times more return on investment than Premier Technology. However, AIM Industrial Growth is 1.02 times less risky than Premier Technology. It trades about 0.09 of its potential returns per unit of risk. Premier Technology Public is currently generating about 0.01 per unit of risk. If you would invest  1,019  in AIM Industrial Growth on September 13, 2024 and sell it today you would earn a total of  41.00  from holding AIM Industrial Growth or generate 4.02% return on investment over 90 days.

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

AIM Industrial Growth  vs.  Premier Technology Public

AIM Industrial Growth

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AIM Industrial Growth are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, AIM Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Premier Technology Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Technology Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Premier Technology 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 Industrial and Premier Technology

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

The idea behind AIM Industrial Growth and Premier Technology 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.