Correlation Between Cactus and Auri
Can any of the company-specific risk be diversified away by investing in both Cactus 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 Cactus and Auri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Auri Inc, you can compare the effects of market volatilities on Cactus 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 Cactus with a short position of Auri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Auri.
Diversification Opportunities for Cactus and Auri
Weak diversification
The 3 months correlation between Cactus and Auri is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Auri Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auri Inc and Cactus 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 Cactus Inc 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 Cactus i.e., Cactus and Auri go up and down completely randomly.
Pair Corralation between Cactus and Auri
Considering the 90-day investment horizon Cactus is expected to generate 33.58 times less return on investment than Auri. But when comparing it to its historical volatility, Cactus Inc is 11.9 times less risky than Auri. It trades about 0.04 of its potential returns per unit of risk. Auri Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.11 in Auri Inc on September 2, 2024 and sell it today you would lose (0.09) from holding Auri Inc or give up 81.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cactus Inc vs. Auri Inc
Performance |
| Timeline |
| Cactus Inc |
| Auri Inc |
Cactus and Auri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Auri
The main advantage of trading using opposite Cactus and Auri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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