Correlation Between Aeris Environmental and Autosports
Can any of the company-specific risk be diversified away by investing in both Aeris Environmental and Autosports 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 Aeris Environmental and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeris Environmental and Autosports Group, you can compare the effects of market volatilities on Aeris Environmental and Autosports 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 Aeris Environmental with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeris Environmental and Autosports.
Diversification Opportunities for Aeris Environmental and Autosports
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aeris and Autosports is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aeris Environmental and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Aeris Environmental 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 Aeris Environmental are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Aeris Environmental i.e., Aeris Environmental and Autosports go up and down completely randomly.
Pair Corralation between Aeris Environmental and Autosports
Assuming the 90 days trading horizon Aeris Environmental is expected to generate 1.98 times more return on investment than Autosports. However, Aeris Environmental is 1.98 times more volatile than Autosports Group. It trades about 0.07 of its potential returns per unit of risk. Autosports Group is currently generating about -0.03 per unit of risk. If you would invest 6.40 in Aeris Environmental on August 28, 2024 and sell it today you would earn a total of 1.80 from holding Aeris Environmental or generate 28.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeris Environmental vs. Autosports Group
Performance |
| Timeline |
| Aeris Environmental |
| Autosports Group |
Aeris Environmental and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeris Environmental and Autosports
The main advantage of trading using opposite Aeris Environmental and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeris Environmental position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Aeris Environmental vs. Audio Pixels Holdings | Aeris Environmental vs. Iodm | Aeris Environmental vs. Nsx | Aeris Environmental vs. TTG Fintech |
| Autosports vs. Aneka Tambang Tbk | Autosports vs. Macquarie Group | Autosports vs. Macquarie Group Ltd | Autosports vs. Challenger |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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