Correlation Between Barunson Entertainment and AurosTechnology

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

By analyzing existing cross correlation between Barunson Entertainment Arts and AurosTechnology, you can compare the effects of market volatilities on Barunson Entertainment and AurosTechnology 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 Barunson Entertainment with a short position of AurosTechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barunson Entertainment and AurosTechnology.

Diversification Opportunities for Barunson Entertainment and AurosTechnology

0.79

Correlation Coefficient

Barunson Entertainment  AurosTechnology

Poor diversification

The 3 months correlation between Barunson and AurosTechnology is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Barunson Entertainment Arts and AurosTechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AurosTechnology and Barunson Entertainment 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 Barunson Entertainment Arts are associated (or correlated) with AurosTechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AurosTechnology has no effect on the direction of Barunson Entertainment i.e., Barunson Entertainment and AurosTechnology go up and down completely randomly.

Pair Corralation between Barunson Entertainment and AurosTechnology

Assuming the 90 days trading horizon Barunson Entertainment Arts is expected to generate 0.51 times more return on investment than AurosTechnology. However, Barunson Entertainment Arts is 1.97 times less risky than AurosTechnology. It trades about -0.1 of its potential returns per unit of risk. AurosTechnology is currently generating about -0.1 per unit of risk. If you would invest  49,800  in Barunson Entertainment Arts on September 4, 2024 and sell it today you would lose (5,000) from holding Barunson Entertainment Arts or give up 10.04% of portfolio value over 90 days.

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

Barunson Entertainment Arts  vs.  AurosTechnology

Barunson Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barunson Entertainment Arts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AurosTechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AurosTechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Barunson Entertainment and AurosTechnology

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

The idea behind Barunson Entertainment Arts and AurosTechnology 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.