Correlation Between A2Z Smart and LeddarTech Holdings

Can any of the company-specific risk be diversified away by investing in both A2Z Smart and LeddarTech Holdings 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 A2Z Smart and LeddarTech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A2Z Smart Technologies and LeddarTech Holdings, you can compare the effects of market volatilities on A2Z Smart and LeddarTech Holdings 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 A2Z Smart with a short position of LeddarTech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2Z Smart and LeddarTech Holdings.

Diversification Opportunities for A2Z Smart and LeddarTech Holdings

-0.4

Correlation Coefficient

A2Z Smart  LeddarTech Holdings

Very good diversification

The 3 months correlation between A2Z and LeddarTech is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding A2Z Smart Technologies and LeddarTech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeddarTech Holdings and A2Z Smart 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 A2Z Smart Technologies are associated (or correlated) with LeddarTech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeddarTech Holdings has no effect on the direction of A2Z Smart i.e., A2Z Smart and LeddarTech Holdings go up and down completely randomly.

Pair Corralation between A2Z Smart and LeddarTech Holdings

Allowing for the 90-day total investment horizon A2Z Smart Technologies is expected to generate 1.18 times more return on investment than LeddarTech Holdings. However, A2Z Smart is 1.18 times more volatile than LeddarTech Holdings. It trades about 0.33 of its potential returns per unit of risk. LeddarTech Holdings is currently generating about -0.07 per unit of risk. If you would invest  155.00  in A2Z Smart Technologies on September 5, 2024 and sell it today you would earn a total of  504.00  from holding A2Z Smart Technologies or generate 325.16% return on investment over 90 days.

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

A2Z Smart Technologies  vs.  LeddarTech Holdings

A2Z Smart Technologies

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, A2Z Smart showed solid returns over the last few months and may actually be approaching a breakup point.

LeddarTech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LeddarTech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with A2Z Smart and LeddarTech Holdings

The main advantage of trading using opposite A2Z Smart and LeddarTech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2Z Smart position performs unexpectedly, LeddarTech Holdings 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 LeddarTech Holdings will offset losses from the drop in LeddarTech Holdings' long position.

The idea behind A2Z Smart Technologies and LeddarTech Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..