Correlation Between United Utilities and Aimfinity Investment

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

By analyzing existing cross correlation between United Utilities Group and Aimfinity Investment I, you can compare the effects of market volatilities on United Utilities and Aimfinity Investment 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 United Utilities with a short position of Aimfinity Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Aimfinity Investment.

Diversification Opportunities for United Utilities and Aimfinity Investment

0.34

Correlation Coefficient

United Utilities  Aimfinity Investment

Weak diversification

The 3 months correlation between United and Aimfinity is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Aimfinity Investment I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimfinity Investment and United Utilities 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 United Utilities Group are associated (or correlated) with Aimfinity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimfinity Investment has no effect on the direction of United Utilities i.e., United Utilities and Aimfinity Investment go up and down completely randomly.

Pair Corralation between United Utilities and Aimfinity Investment

Assuming the 90 days horizon United Utilities Group is expected to generate 4.14 times more return on investment than Aimfinity Investment. However, United Utilities is 4.14 times more volatile than Aimfinity Investment I. It trades about 0.09 of its potential returns per unit of risk. Aimfinity Investment I is currently generating about 0.12 per unit of risk. If you would invest  1,286  in United Utilities Group on September 12, 2024 and sell it today you would earn a total of  108.00  from holding United Utilities Group or generate 8.4% return on investment over 90 days.

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

United Utilities Group  vs.  Aimfinity Investment I

United Utilities

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Utilities Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, United Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aimfinity Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aimfinity Investment I are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Aimfinity Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Utilities and Aimfinity Investment

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

The idea behind United Utilities Group and Aimfinity Investment I 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.