Correlation Between Aldel Financial and Eldorado Gold

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

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

Diversification Opportunities for Aldel Financial and Eldorado Gold

0.35

Correlation Coefficient

Aldel Financial  Eldorado Gold

Weak diversification

The 3 months correlation between Aldel and Eldorado is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Aldel Financial i.e., Aldel Financial and Eldorado Gold go up and down completely randomly.

Pair Corralation between Aldel Financial and Eldorado Gold

Assuming the 90 days horizon Aldel Financial II is expected to generate 0.04 times more return on investment than Eldorado Gold. However, Aldel Financial II is 22.58 times less risky than Eldorado Gold. It trades about 0.11 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.09 per unit of risk. If you would invest  999.00  in Aldel Financial II on September 21, 2024 and sell it today you would earn a total of  5.00  from holding Aldel Financial II or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

Aldel Financial II  vs.  Eldorado Gold Corp

Aldel Financial II

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aldel Financial and Eldorado Gold

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

The idea behind Aldel Financial II and Eldorado Gold Corp 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.