Correlation Between Aurora World and Daewoo SBI

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

By analyzing existing cross correlation between Aurora World and Daewoo SBI SPAC, you can compare the effects of market volatilities on Aurora World and Daewoo SBI 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 Aurora World with a short position of Daewoo SBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora World and Daewoo SBI.

Diversification Opportunities for Aurora World and Daewoo SBI

-0.1

Correlation Coefficient

Aurora World  Daewoo SBI

Good diversification

The 3 months correlation between Aurora and Daewoo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aurora World and Daewoo SBI SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo SBI SPAC and Aurora World 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 Aurora World are associated (or correlated) with Daewoo SBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo SBI SPAC has no effect on the direction of Aurora World i.e., Aurora World and Daewoo SBI go up and down completely randomly.

Pair Corralation between Aurora World and Daewoo SBI

Assuming the 90 days trading horizon Aurora World is expected to generate 12.12 times less return on investment than Daewoo SBI. But when comparing it to its historical volatility, Aurora World is 2.78 times less risky than Daewoo SBI. It trades about 0.04 of its potential returns per unit of risk. Daewoo SBI SPAC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  238,500  in Daewoo SBI SPAC on September 29, 2024 and sell it today you would earn a total of  40,000  from holding Daewoo SBI SPAC or generate 16.77% return on investment over 90 days.

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

Aurora World  vs.  Daewoo SBI SPAC

Aurora World

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora World are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aurora World sustained solid returns over the last few months and may actually be approaching a breakup point.

Daewoo SBI SPAC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daewoo SBI SPAC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daewoo SBI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aurora World and Daewoo SBI

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

The idea behind Aurora World and Daewoo SBI SPAC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.