Correlation Between Aldel Financial and 48250NAC9

Can any of the company-specific risk be diversified away by investing in both Aldel Financial and 48250NAC9 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 Aldel Financial and 48250NAC9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aldel Financial II and KFC Holding 475, you can compare the effects of market volatilities on Aldel Financial and 48250NAC9 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 Aldel Financial with a short position of 48250NAC9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and 48250NAC9.

Diversification Opportunities for Aldel Financial and 48250NAC9

-0.58

Correlation Coefficient

Aldel Financial  48250NAC9

Excellent diversification

The 3 months correlation between Aldel and 48250NAC9 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and KFC Holding 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFC Holding 475 and Aldel Financial 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 Aldel Financial II are associated (or correlated) with 48250NAC9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFC Holding 475 has no effect on the direction of Aldel Financial i.e., Aldel Financial and 48250NAC9 go up and down completely randomly.

Pair Corralation between Aldel Financial and 48250NAC9

Assuming the 90 days horizon Aldel Financial is expected to generate 43051.0 times less return on investment than 48250NAC9. But when comparing it to its historical volatility, Aldel Financial II is 649.23 times less risky than 48250NAC9. It trades about 0.0 of its potential returns per unit of risk. KFC Holding 475 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,804  in KFC Holding 475 on September 3, 2024 and sell it today you would lose (33.00) from holding KFC Holding 475 or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	6.94%
Values	Daily Returns

Aldel Financial II  vs.  KFC Holding 475

Aldel Financial II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aldel Financial II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

KFC Holding 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KFC Holding 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 48250NAC9 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aldel Financial and 48250NAC9

The main advantage of trading using opposite Aldel Financial and 48250NAC9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, 48250NAC9 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 48250NAC9 will offset losses from the drop in 48250NAC9's long position.

The idea behind Aldel Financial II and KFC Holding 475 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.