Correlation Between Riverview Rubber and Aurelius Technologies

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

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

Diversification Opportunities for Riverview Rubber and Aurelius Technologies

-0.4

Correlation Coefficient

Riverview Rubber  Aurelius Technologies

Very good diversification

The 3 months correlation between Riverview and Aurelius is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Riverview Rubber Estates 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 Riverview Rubber 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 Riverview Rubber Estates 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 Riverview Rubber i.e., Riverview Rubber and Aurelius Technologies go up and down completely randomly.

Pair Corralation between Riverview Rubber and Aurelius Technologies

Assuming the 90 days trading horizon Riverview Rubber is expected to generate 4.63 times less return on investment than Aurelius Technologies. In addition to that, Riverview Rubber is 1.16 times more volatile than Aurelius Technologies Bhd. It trades about 0.01 of its total potential returns per unit of risk. Aurelius Technologies Bhd is currently generating about 0.03 per unit of volatility. If you would invest  264.00  in Aurelius Technologies Bhd on October 23, 2024 and sell it today you would earn a total of  65.00  from holding Aurelius Technologies Bhd or generate 24.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.46%
Values	Daily Returns

Riverview Rubber Estates  vs.  Aurelius Technologies Bhd

Riverview Rubber Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riverview Rubber Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Riverview Rubber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Aurelius Technologies Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelius Technologies Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Aurelius Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Riverview Rubber and Aurelius Technologies

The main advantage of trading using opposite Riverview Rubber and Aurelius Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riverview Rubber 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 Riverview Rubber Estates 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.