Correlation Between Addtech and Aurora Investment
Can any of the company-specific risk be diversified away by investing in both Addtech and Aurora Investment 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 Addtech and Aurora Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech and Aurora Investment Trust, you can compare the effects of market volatilities on Addtech and Aurora Investment 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 Addtech with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech and Aurora Investment.
Diversification Opportunities for Addtech and Aurora Investment
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Addtech and Aurora is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Addtech and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust and Addtech 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 Addtech are associated (or correlated) with Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of Addtech i.e., Addtech and Aurora Investment go up and down completely randomly.
Pair Corralation between Addtech and Aurora Investment
Assuming the 90 days trading horizon Addtech is expected to generate 1.37 times more return on investment than Aurora Investment. However, Addtech is 1.37 times more volatile than Aurora Investment Trust. It trades about -0.01 of its potential returns per unit of risk. Aurora Investment Trust is currently generating about -0.16 per unit of risk. If you would invest 31,006 in Addtech on September 12, 2024 and sell it today you would lose (146.00) from holding Addtech or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech vs. Aurora Investment Trust
Performance |
| Timeline |
| Addtech |
| Aurora Investment Trust |
Addtech and Aurora Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech and Aurora Investment
The main advantage of trading using opposite Addtech and Aurora Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech position performs unexpectedly, Aurora Investment 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 Aurora Investment will offset losses from the drop in Aurora Investment's long position.| Addtech vs. Hong Kong Land | Addtech vs. Neometals | Addtech vs. Coor Service Management | Addtech vs. Fidelity Sustainable USD |
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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 the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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