Correlation Between Aldel Financial and Palladyne

Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Palladyne 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 Palladyne 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 Palladyne AI Corp, you can compare the effects of market volatilities on Aldel Financial and Palladyne 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 Palladyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Palladyne.

Diversification Opportunities for Aldel Financial and Palladyne

0.48

Correlation Coefficient

Aldel Financial  Palladyne

Very weak diversification

The 3 months correlation between Aldel and Palladyne is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Palladyne AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palladyne AI 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 Palladyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palladyne AI Corp has no effect on the direction of Aldel Financial i.e., Aldel Financial and Palladyne go up and down completely randomly.

Pair Corralation between Aldel Financial and Palladyne

Assuming the 90 days horizon Aldel Financial is expected to generate 87995.0 times less return on investment than Palladyne. But when comparing it to its historical volatility, Aldel Financial II is 295.7 times less risky than Palladyne. It trades about 0.0 of its potential returns per unit of risk. Palladyne AI Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  205.00  in Palladyne AI Corp on September 1, 2024 and sell it today you would earn a total of  441.00  from holding Palladyne AI Corp or generate 215.12% return on investment over 90 days.

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

Aldel Financial II  vs.  Palladyne AI Corp

Aldel Financial II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aldel Financial II has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Palladyne AI Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palladyne AI Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Palladyne displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aldel Financial and Palladyne

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

The idea behind Aldel Financial II and Palladyne AI 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.