Correlation Between Induction Healthcare and Aurora Investment
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare 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 Induction Healthcare and Aurora Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and Aurora Investment Trust, you can compare the effects of market volatilities on Induction Healthcare 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 Induction Healthcare with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Aurora Investment.
Diversification Opportunities for Induction Healthcare and Aurora Investment
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Induction and Aurora is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group 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 Induction Healthcare 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 Induction Healthcare Group 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 Induction Healthcare i.e., Induction Healthcare and Aurora Investment go up and down completely randomly.
Pair Corralation between Induction Healthcare and Aurora Investment
Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the Aurora Investment. In addition to that, Induction Healthcare is 3.78 times more volatile than Aurora Investment Trust. It trades about -0.08 of its total potential returns per unit of risk. Aurora Investment Trust is currently generating about 0.0 per unit of volatility. If you would invest 23,086 in Aurora Investment Trust on September 2, 2024 and sell it today you would lose (86.00) from holding Aurora Investment Trust or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Induction Healthcare Group vs. Aurora Investment Trust
Performance |
| Timeline |
| Induction Healthcare |
| Aurora Investment Trust |
Induction Healthcare and Aurora Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and Aurora Investment
The main advantage of trading using opposite Induction Healthcare and Aurora Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare 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.| Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Hyundai Motor | Induction Healthcare vs. Toyota Motor Corp |
| Aurora Investment vs. Toyota Motor Corp | Aurora Investment vs. SoftBank Group Corp | Aurora Investment vs. OTP Bank Nyrt | Aurora Investment vs. Las Vegas Sands |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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