Correlation Between Profire Ene and Auri
Can any of the company-specific risk be diversified away by investing in both Profire Ene and Auri 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 Profire Ene and Auri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profire Ene and Auri Inc, you can compare the effects of market volatilities on Profire Ene and Auri 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 Profire Ene with a short position of Auri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profire Ene and Auri.
Diversification Opportunities for Profire Ene and Auri
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Profire and Auri is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Profire Ene and Auri Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auri Inc and Profire Ene 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 Profire Ene are associated (or correlated) with Auri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auri Inc has no effect on the direction of Profire Ene i.e., Profire Ene and Auri go up and down completely randomly.
Pair Corralation between Profire Ene and Auri
Given the investment horizon of 90 days Profire Ene is expected to generate 13.83 times less return on investment than Auri. But when comparing it to its historical volatility, Profire Ene is 8.1 times less risky than Auri. It trades about 0.11 of its potential returns per unit of risk. Auri Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Auri Inc on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Auri Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Profire Ene vs. Auri Inc
Performance |
| Timeline |
| Profire Ene |
| Auri Inc |
Profire Ene and Auri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profire Ene and Auri
The main advantage of trading using opposite Profire Ene and Auri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profire Ene position performs unexpectedly, Auri 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 Auri will offset losses from the drop in Auri's long position.| Profire Ene vs. Enerflex | Profire Ene vs. Now Inc | Profire Ene vs. Bristow Group | Profire Ene vs. Helix Energy Solutions |
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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