Correlation Between Aurora Solar and Legend Power
Can any of the company-specific risk be diversified away by investing in both Aurora Solar and Legend Power 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 Aurora Solar and Legend Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Solar Technologies and Legend Power Systems, you can compare the effects of market volatilities on Aurora Solar and Legend Power 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 Solar with a short position of Legend Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Solar and Legend Power.
Diversification Opportunities for Aurora Solar and Legend Power
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aurora and Legend is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Solar Technologies and Legend Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Power Systems and Aurora Solar 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 Solar Technologies are associated (or correlated) with Legend Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Power Systems has no effect on the direction of Aurora Solar i.e., Aurora Solar and Legend Power go up and down completely randomly.
Pair Corralation between Aurora Solar and Legend Power
Assuming the 90 days horizon Aurora Solar Technologies is expected to generate 1.63 times more return on investment than Legend Power. However, Aurora Solar is 1.63 times more volatile than Legend Power Systems. It trades about 0.03 of its potential returns per unit of risk. Legend Power Systems is currently generating about 0.02 per unit of risk. If you would invest 6.00 in Aurora Solar Technologies on September 4, 2024 and sell it today you would lose (4.00) from holding Aurora Solar Technologies or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Solar Technologies vs. Legend Power Systems
Performance |
| Timeline |
| Aurora Solar Technologies |
| Legend Power Systems |
Aurora Solar and Legend Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Solar and Legend Power
The main advantage of trading using opposite Aurora Solar and Legend Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Solar position performs unexpectedly, Legend Power 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 Legend Power will offset losses from the drop in Legend Power's long position.| Aurora Solar vs. Solar Alliance Energy | Aurora Solar vs. Lite Access Technologies | Aurora Solar vs. Braille Energy Systems |
| Legend Power vs. Kraken Robotics | Legend Power vs. Lite Access Technologies | Legend Power vs. DynaCERT | Legend Power vs. Aurora Solar Technologies |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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