Correlation Between Daya Materials and Aurelius Technologies

Can any of the company-specific risk be diversified away by investing in both Daya Materials and Aurelius Technologies 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 Daya Materials and Aurelius Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daya Materials Bhd and Aurelius Technologies Bhd, you can compare the effects of market volatilities on Daya Materials and Aurelius Technologies 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 Daya Materials with a short position of Aurelius Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daya Materials and Aurelius Technologies.

Diversification Opportunities for Daya Materials and Aurelius Technologies

0.46

Correlation Coefficient

Daya Materials  Aurelius Technologies

Very weak diversification

The 3 months correlation between Daya and Aurelius is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Daya Materials Bhd and Aurelius Technologies Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelius Technologies Bhd and Daya Materials 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 Daya Materials Bhd are associated (or correlated) with Aurelius Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelius Technologies Bhd has no effect on the direction of Daya Materials i.e., Daya Materials and Aurelius Technologies go up and down completely randomly.

Pair Corralation between Daya Materials and Aurelius Technologies

Assuming the 90 days trading horizon Daya Materials Bhd is expected to generate 3.92 times more return on investment than Aurelius Technologies. However, Daya Materials is 3.92 times more volatile than Aurelius Technologies Bhd. It trades about -0.02 of its potential returns per unit of risk. Aurelius Technologies Bhd is currently generating about -0.09 per unit of risk. If you would invest  11.00  in Daya Materials Bhd on December 25, 2024 and sell it today you would lose (2.50) from holding Daya Materials Bhd or give up 22.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Daya Materials Bhd  vs.  Aurelius Technologies Bhd

Daya Materials Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daya Materials Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Aurelius Technologies Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aurelius Technologies Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Daya Materials and Aurelius Technologies

The main advantage of trading using opposite Daya Materials and Aurelius Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daya Materials position performs unexpectedly, Aurelius Technologies 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 Aurelius Technologies will offset losses from the drop in Aurelius Technologies' long position.

The idea behind Daya Materials Bhd and Aurelius Technologies Bhd 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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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.