Correlation Between AAC Holdings and Lucy Scientific

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

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

Diversification Opportunities for AAC Holdings and Lucy Scientific

-0.87

Correlation Coefficient

AAC Holdings  Lucy Scientific

Pay attention - limited upside

The 3 months correlation between AAC and Lucy is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding AAC Holdings and Lucy Scientific Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucy Scientific Discovery and AAC Holdings 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 AAC Holdings are associated (or correlated) with Lucy Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucy Scientific Discovery has no effect on the direction of AAC Holdings i.e., AAC Holdings and Lucy Scientific go up and down completely randomly.

Pair Corralation between AAC Holdings and Lucy Scientific

If you would invest  80.00  in Lucy Scientific Discovery on June 9, 2024 and sell it today you would lose (78.00) from holding Lucy Scientific Discovery or give up 97.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.69%
Values	Daily Returns

AAC Holdings  vs.  Lucy Scientific Discovery

AAC Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AAC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AAC Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lucy Scientific Discovery

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lucy Scientific Discovery are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Lucy Scientific demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAC Holdings and Lucy Scientific

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

The idea behind AAC Holdings and Lucy Scientific Discovery 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.