Correlation Between Sofwave Medical and Aura Investments
Can any of the company-specific risk be diversified away by investing in both Sofwave Medical 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 Sofwave Medical and Aura Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofwave Medical and Aura Investments, you can compare the effects of market volatilities on Sofwave Medical 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 Sofwave Medical with a short position of Aura Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofwave Medical and Aura Investments.
Diversification Opportunities for Sofwave Medical and Aura Investments
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sofwave and Aura is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Sofwave Medical 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 Sofwave Medical 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 Sofwave Medical i.e., Sofwave Medical and Aura Investments go up and down completely randomly.
Pair Corralation between Sofwave Medical and Aura Investments
Assuming the 90 days trading horizon Sofwave Medical is expected to generate 2.62 times less return on investment than Aura Investments. In addition to that, Sofwave Medical is 1.78 times more volatile than Aura Investments. It trades about 0.03 of its total potential returns per unit of risk. Aura Investments is currently generating about 0.12 per unit of volatility. If you would invest 191,800 in Aura Investments on September 18, 2024 and sell it today you would earn a total of 6,400 from holding Aura Investments or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sofwave Medical vs. Aura Investments
Performance |
| Timeline |
| Sofwave Medical |
| Aura Investments |
Sofwave Medical and Aura Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofwave Medical and Aura Investments
The main advantage of trading using opposite Sofwave Medical and Aura Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofwave Medical 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.| Sofwave Medical vs. Harel Insurance Investments | Sofwave Medical vs. Shagrir Group Vehicle | Sofwave Medical vs. Rapac Communication Infrastructure | Sofwave Medical vs. Batm Advanced Communications |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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