Correlation Between Petrochemical and Aura Investments
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Aura Investments 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 Petrochemical and Aura Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Aura Investments, you can compare the effects of market volatilities on Petrochemical and Aura Investments 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 Petrochemical with a short position of Aura Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Aura Investments.
Diversification Opportunities for Petrochemical and Aura Investments
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Petrochemical and Aura is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Petrochemical 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 Petrochemical are associated (or correlated) with Aura Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Investments has no effect on the direction of Petrochemical i.e., Petrochemical and Aura Investments go up and down completely randomly.
Pair Corralation between Petrochemical and Aura Investments
Assuming the 90 days trading horizon Petrochemical is expected to under-perform the Aura Investments. In addition to that, Petrochemical is 1.25 times more volatile than Aura Investments. It trades about 0.0 of its total potential returns per unit of risk. Aura Investments is currently generating about 0.16 per unit of volatility. If you would invest 127,980 in Aura Investments on September 1, 2024 and sell it today you would earn a total of 56,220 from holding Aura Investments or generate 43.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrochemical vs. Aura Investments
Performance |
| Timeline |
| Petrochemical |
| Aura Investments |
Petrochemical and Aura Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Aura Investments
The main advantage of trading using opposite Petrochemical and Aura Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Aura Investments 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 Aura Investments will offset losses from the drop in Aura Investments' long position.| Petrochemical vs. Brainsway | Petrochemical vs. Mivne Real Estate | Petrochemical vs. Photomyne | Petrochemical vs. Israel Land Development |
| Aura Investments vs. Israel Canada | Aura Investments vs. Azrieli Group | Aura Investments vs. Delek Group | Aura Investments vs. Shikun Binui |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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