Correlation Between Vienna Insurance and Aurora Investment

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

By analyzing existing cross correlation between Vienna Insurance Group and Aurora Investment Trust, you can compare the effects of market volatilities on Vienna Insurance and Aurora Investment 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 Vienna Insurance with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Aurora Investment.

Diversification Opportunities for Vienna Insurance and Aurora Investment

0.65

Correlation Coefficient

Vienna Insurance  Aurora Investment

Poor diversification

The 3 months correlation between Vienna and Aurora is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust and Vienna Insurance 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 Vienna Insurance Group are associated (or correlated) with Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of Vienna Insurance i.e., Vienna Insurance and Aurora Investment go up and down completely randomly.

Pair Corralation between Vienna Insurance and Aurora Investment

Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 1.04 times more return on investment than Aurora Investment. However, Vienna Insurance is 1.04 times more volatile than Aurora Investment Trust. It trades about 0.44 of its potential returns per unit of risk. Aurora Investment Trust is currently generating about 0.04 per unit of risk. If you would invest  3,020  in Vienna Insurance Group on December 30, 2024 and sell it today you would earn a total of  1,105  from holding Vienna Insurance Group or generate 36.59% return on investment over 90 days.

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

Vienna Insurance Group  vs.  Aurora Investment Trust

Vienna Insurance

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vienna Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aurora Investment Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Investment Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Aurora Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vienna Insurance and Aurora Investment

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

The idea behind Vienna Insurance Group and Aurora Investment Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.