Correlation Between Aurora Optoelectronics and Northern United
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By analyzing existing cross correlation between Aurora Optoelectronics Co and Northern United Publishing, you can compare the effects of market volatilities on Aurora Optoelectronics and Northern United 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 Aurora Optoelectronics with a short position of Northern United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Optoelectronics and Northern United.
Diversification Opportunities for Aurora Optoelectronics and Northern United
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aurora and Northern is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Optoelectronics Co and Northern United Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern United Publ and Aurora Optoelectronics 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 Aurora Optoelectronics Co are associated (or correlated) with Northern United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern United Publ has no effect on the direction of Aurora Optoelectronics i.e., Aurora Optoelectronics and Northern United go up and down completely randomly.
Pair Corralation between Aurora Optoelectronics and Northern United
Assuming the 90 days trading horizon Aurora Optoelectronics Co is expected to under-perform the Northern United. In addition to that, Aurora Optoelectronics is 1.33 times more volatile than Northern United Publishing. It trades about -0.3 of its total potential returns per unit of risk. Northern United Publishing is currently generating about -0.29 per unit of volatility. If you would invest 753.00 in Northern United Publishing on October 20, 2024 and sell it today you would lose (133.00) from holding Northern United Publishing or give up 17.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aurora Optoelectronics Co vs. Northern United Publishing
Performance |
| Timeline |
| Aurora Optoelectronics |
| Northern United Publ |
Aurora Optoelectronics and Northern United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Optoelectronics and Northern United
The main advantage of trading using opposite Aurora Optoelectronics and Northern United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Optoelectronics position performs unexpectedly, Northern United 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 Northern United will offset losses from the drop in Northern United's long position.The idea behind Aurora Optoelectronics Co and Northern United Publishing 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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