Correlation Between One 97 and AU Small

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Can any of the company-specific risk be diversified away by investing in both One 97 and AU Small 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 One 97 and AU Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One 97 Communications and AU Small Finance, you can compare the effects of market volatilities on One 97 and AU Small 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 One 97 with a short position of AU Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of One 97 and AU Small.

Diversification Opportunities for One 97 and AU Small

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between One and AUBANK is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding One 97 Communications and AU Small Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Small Finance and One 97 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 One 97 Communications are associated (or correlated) with AU Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AU Small Finance has no effect on the direction of One 97 i.e., One 97 and AU Small go up and down completely randomly.

Pair Corralation between One 97 and AU Small

Assuming the 90 days trading horizon One 97 Communications is expected to generate 2.12 times more return on investment than AU Small. However, One 97 is 2.12 times more volatile than AU Small Finance. It trades about 0.03 of its potential returns per unit of risk. AU Small Finance is currently generating about -0.03 per unit of risk. If you would invest  77,200  in One 97 Communications on August 31, 2024 and sell it today you would earn a total of  12,975  from holding One 97 Communications or generate 16.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.46%
ValuesDaily Returns

One 97 Communications  vs.  AU Small Finance

 Performance 
       Timeline  
One 97 Communications 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in One 97 Communications are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, One 97 displayed solid returns over the last few months and may actually be approaching a breakup point.
AU Small Finance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AU Small Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

One 97 and AU Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with One 97 and AU Small

The main advantage of trading using opposite One 97 and AU Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One 97 position performs unexpectedly, AU Small 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 AU Small will offset losses from the drop in AU Small's long position.
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The idea behind One 97 Communications and AU Small Finance 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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