Correlation Between Corporate Travel and AURELIUS Equity

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

By analyzing existing cross correlation between Corporate Travel Management and AURELIUS Equity Opportunities, you can compare the effects of market volatilities on Corporate Travel and AURELIUS Equity 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 Corporate Travel with a short position of AURELIUS Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and AURELIUS Equity.

Diversification Opportunities for Corporate Travel and AURELIUS Equity

0.58

Correlation Coefficient

Corporate Travel  AURELIUS Equity

Very weak diversification

The 3 months correlation between Corporate and AURELIUS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and AURELIUS Equity Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURELIUS Equity Oppo and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with AURELIUS Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURELIUS Equity Oppo has no effect on the direction of Corporate Travel i.e., Corporate Travel and AURELIUS Equity go up and down completely randomly.

Pair Corralation between Corporate Travel and AURELIUS Equity

Assuming the 90 days trading horizon Corporate Travel Management is expected to under-perform the AURELIUS Equity. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Travel Management is 11.28 times less risky than AURELIUS Equity. The stock trades about -0.04 of its potential returns per unit of risk. The AURELIUS Equity Opportunities is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,324  in AURELIUS Equity Opportunities on October 9, 2024 and sell it today you would earn a total of  6,836  from holding AURELIUS Equity Opportunities or generate 516.31% return on investment over 90 days.

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

Corporate Travel Management  vs.  AURELIUS Equity Opportunities

Corporate Travel Man

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AURELIUS Equity Oppo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AURELIUS Equity Opportunities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AURELIUS Equity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporate Travel and AURELIUS Equity

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

The idea behind Corporate Travel Management and AURELIUS Equity Opportunities 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.