Correlation Between 00108WAF7 and RILIN

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and RILIN 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 00108WAF7 and RILIN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and RILIN 3625 12 JAN 52, you can compare the effects of market volatilities on 00108WAF7 and RILIN 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 00108WAF7 with a short position of RILIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and RILIN.

Diversification Opportunities for 00108WAF7 and RILIN

-0.27

Correlation Coefficient

00108WAF7  RILIN

Very good diversification

The 3 months correlation between 00108WAF7 and RILIN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and RILIN 3625 12 JAN 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RILIN 3625 12 and 00108WAF7 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 AEP TEX INC are associated (or correlated) with RILIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RILIN 3625 12 has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and RILIN go up and down completely randomly.

Pair Corralation between 00108WAF7 and RILIN

Assuming the 90 days trading horizon AEP TEX INC is expected to generate 150.09 times more return on investment than RILIN. However, 00108WAF7 is 150.09 times more volatile than RILIN 3625 12 JAN 52. It trades about 0.13 of its potential returns per unit of risk. RILIN 3625 12 JAN 52 is currently generating about -0.21 per unit of risk. If you would invest  7,707  in AEP TEX INC on September 26, 2024 and sell it today you would lose (39.00) from holding AEP TEX INC or give up 0.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.85%
Values	Daily Returns

AEP TEX INC  vs.  RILIN 3625 12 JAN 52

AEP TEX INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAF7 sustained solid returns over the last few months and may actually be approaching a breakup point.

RILIN 3625 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RILIN 3625 12 JAN 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for RILIN 3625 12 JAN 52 investors.

Pair Trading with 00108WAF7 and RILIN

The main advantage of trading using opposite 00108WAF7 and RILIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, RILIN 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 RILIN will offset losses from the drop in RILIN's long position.

The idea behind AEP TEX INC and RILIN 3625 12 JAN 52 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.