Correlation Between AID AUTO and ALARMGUARD HOLDINGS

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

Diversification Opportunities for AID AUTO and ALARMGUARD HOLDINGS

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between AID AUTO and ALARMGUARD HOLDINGS

If you would invest (100.00)  in ALARMGUARD HOLDINGS INC on February 26, 2022 and sell it today you would earn a total of  100.00  from holding ALARMGUARD HOLDINGS INC or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AID AUTO STORES  vs.  ALARMGUARD HOLDINGS INC

 Performance (%) 
      Timeline 
AID AUTO STORES 
AIDA1 Performance
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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 INC 
ALARMGUARD Performance
0 of 100
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 and ALARMGUARD HOLDINGS Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AID AUTO and ALARMGUARD HOLDINGS

The main advantage of trading using opposite AID AUTO and ALARMGUARD HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AID AUTO position performs unexpectedly, ALARMGUARD HOLDINGS 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 ALARMGUARD HOLDINGS will offset losses from the drop in ALARMGUARD HOLDINGS's long position.
The idea behind AID AUTO STORES and ALARMGUARD HOLDINGS INC 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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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