Correlation Between AeroCentury Corp and FlexShopper

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

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

Diversification Opportunities for AeroCentury Corp and FlexShopper

0.0

Correlation Coefficient

AeroCentury Corp  FlexShopper

Pay attention - limited upside

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

Pair Corralation between AeroCentury Corp and FlexShopper

If you would invest  79.00  in FlexShopper on January 26, 2024 and sell it today you would earn a total of  28.00  from holding FlexShopper or generate 35.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AeroCentury Corp  vs.  FlexShopper

AeroCentury Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AeroCentury Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, AeroCentury Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

FlexShopper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShopper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AeroCentury Corp and FlexShopper

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

The idea behind AeroCentury Corp and FlexShopper 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.