Correlation Between Make To and Aurora Design
Can any of the company-specific risk be diversified away by investing in both Make To and Aurora Design 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 Make To and Aurora Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Make To Win and Aurora Design PCL, you can compare the effects of market volatilities on Make To and Aurora Design 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 Make To with a short position of Aurora Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Make To and Aurora Design.
Diversification Opportunities for Make To and Aurora Design
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Make and Aurora is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Make To Win and Aurora Design PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Design PCL and Make To 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 Make To Win are associated (or correlated) with Aurora Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Design PCL has no effect on the direction of Make To i.e., Make To and Aurora Design go up and down completely randomly.
Pair Corralation between Make To and Aurora Design
Assuming the 90 days trading horizon Make To Win is expected to under-perform the Aurora Design. In addition to that, Make To is 1.29 times more volatile than Aurora Design PCL. It trades about -0.05 of its total potential returns per unit of risk. Aurora Design PCL is currently generating about -0.03 per unit of volatility. If you would invest 1,430 in Aurora Design PCL on December 1, 2024 and sell it today you would lose (20.00) from holding Aurora Design PCL or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Make To Win vs. Aurora Design PCL
Performance |
| Timeline |
| Make To Win |
| Aurora Design PCL |
Make To and Aurora Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Make To and Aurora Design
The main advantage of trading using opposite Make To and Aurora Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Make To position performs unexpectedly, Aurora Design 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 Design will offset losses from the drop in Aurora Design's long position.| Make To vs. Delta Electronics Public | Make To vs. Delta Electronics Public | Make To vs. Airports of Thailand | Make To vs. PTT Public |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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