Correlation Between Humble Group and AAC Clyde

Can any of the company-specific risk be diversified away by investing in both Humble Group and AAC Clyde 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 Humble Group and AAC Clyde into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humble Group AB and AAC Clyde Space, you can compare the effects of market volatilities on Humble Group and AAC Clyde 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 Humble Group with a short position of AAC Clyde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humble Group and AAC Clyde.

Diversification Opportunities for Humble Group and AAC Clyde

-0.63

Correlation Coefficient

Humble Group  AAC Clyde

Excellent diversification

The 3 months correlation between Humble and AAC is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Humble Group AB and AAC Clyde Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Clyde Space and Humble Group 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 Humble Group AB are associated (or correlated) with AAC Clyde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Clyde Space has no effect on the direction of Humble Group i.e., Humble Group and AAC Clyde go up and down completely randomly.

Pair Corralation between Humble Group and AAC Clyde

Assuming the 90 days trading horizon Humble Group AB is expected to generate 1.24 times more return on investment than AAC Clyde. However, Humble Group is 1.24 times more volatile than AAC Clyde Space. It trades about 0.34 of its potential returns per unit of risk. AAC Clyde Space is currently generating about 0.07 per unit of risk. If you would invest  1,020  in Humble Group AB on September 17, 2024 and sell it today you would earn a total of  245.00  from holding Humble Group AB or generate 24.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Humble Group AB  vs.  AAC Clyde Space

Humble Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humble Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Humble Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

AAC Clyde Space

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, AAC Clyde unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humble Group and AAC Clyde

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

The idea behind Humble Group AB and AAC Clyde Space 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.