Correlation Between ALARMGUARD HOLDINGS and AID AUTO

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Can any of the company-specific risk be diversified away by investing in both ALARMGUARD HOLDINGS and AID AUTO 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 ALARMGUARD HOLDINGS and AID AUTO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALARMGUARD HOLDINGS INC and AID AUTO STORES, you can compare the effects of market volatilities on ALARMGUARD HOLDINGS and AID AUTO 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 ALARMGUARD HOLDINGS with a short position of AID AUTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALARMGUARD HOLDINGS and AID AUTO.

Diversification Opportunities for ALARMGUARD HOLDINGS and AID AUTO

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ALARMGUARD and AIDA1 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ALARMGUARD HOLDINGS INC and AID AUTO STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AID AUTO STORES and ALARMGUARD 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 ALARMGUARD HOLDINGS INC are associated (or correlated) with AID AUTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AID AUTO STORES has no effect on the direction of ALARMGUARD HOLDINGS i.e., ALARMGUARD HOLDINGS and AID AUTO go up and down completely randomly.

Pair Corralation between ALARMGUARD HOLDINGS and AID AUTO

If you would invest (100.00)  in AID AUTO STORES on February 21, 2022 and sell it today you would earn a total of  100.00  from holding AID AUTO STORES or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ALARMGUARD HOLDINGS INC  vs.  AID AUTO STORES

 Performance (%) 
      Timeline 
ALARMGUARD HOLDINGS INC 
ALARMGUARD Performance
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Over the last 90 days ALARMGUARD HOLDINGS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, ALARMGUARD HOLDINGS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
AID AUTO STORES 
AIDA1 Performance
0 of 100
Over the last 90 days AID AUTO STORES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AID AUTO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ALARMGUARD HOLDINGS and AID AUTO Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with ALARMGUARD HOLDINGS and AID AUTO

The main advantage of trading using opposite ALARMGUARD HOLDINGS and AID AUTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALARMGUARD HOLDINGS position performs unexpectedly, AID AUTO 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 AID AUTO will offset losses from the drop in AID AUTO's long position.
The idea behind ALARMGUARD HOLDINGS INC and AID AUTO STORES 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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