Correlation Between SOFTWARE MANSION and Aiton

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

By analyzing existing cross correlation between SOFTWARE MANSION SPOLKA and Aiton, you can compare the effects of market volatilities on SOFTWARE MANSION and Aiton 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 SOFTWARE MANSION with a short position of Aiton. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFTWARE MANSION and Aiton.

Diversification Opportunities for SOFTWARE MANSION and Aiton

0.45

Correlation Coefficient

SOFTWARE MANSION  Aiton

Very weak diversification

The 3 months correlation between SOFTWARE and Aiton is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Aiton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiton and SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA are associated (or correlated) with Aiton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiton has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Aiton go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and Aiton

Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to under-perform the Aiton. But the stock apears to be less risky and, when comparing its historical volatility, SOFTWARE MANSION SPOLKA is 3.37 times less risky than Aiton. The stock trades about -0.05 of its potential returns per unit of risk. The Aiton is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Aiton on September 12, 2024 and sell it today you would lose (3.00) from holding Aiton or give up 7.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

SOFTWARE MANSION SPOLKA  vs.  Aiton

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOFTWARE MANSION SPOLKA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Aiton

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aiton are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Aiton is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SOFTWARE MANSION and Aiton

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

The idea behind SOFTWARE MANSION SPOLKA and Aiton 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.