Correlation Between Miracll Chemicals and Aurora Optoelectronics

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

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

Diversification Opportunities for Miracll Chemicals and Aurora Optoelectronics

0.77

Correlation Coefficient

Miracll Chemicals  Aurora Optoelectronics

Poor diversification

The 3 months correlation between Miracll and Aurora is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Miracll Chemicals Co and Aurora Optoelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Optoelectronics and Miracll Chemicals 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 Miracll Chemicals Co are associated (or correlated) with Aurora Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Optoelectronics has no effect on the direction of Miracll Chemicals i.e., Miracll Chemicals and Aurora Optoelectronics go up and down completely randomly.

Pair Corralation between Miracll Chemicals and Aurora Optoelectronics

Assuming the 90 days trading horizon Miracll Chemicals Co is expected to under-perform the Aurora Optoelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Miracll Chemicals Co is 2.68 times less risky than Aurora Optoelectronics. The stock trades about -0.24 of its potential returns per unit of risk. The Aurora Optoelectronics Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  253.00  in Aurora Optoelectronics Co on September 29, 2024 and sell it today you would lose (1.00) from holding Aurora Optoelectronics Co or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Miracll Chemicals Co  vs.  Aurora Optoelectronics Co

Miracll Chemicals

Risk-Adjusted Performance

1 of 100

Weak

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

Aurora Optoelectronics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Optoelectronics Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aurora Optoelectronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Miracll Chemicals and Aurora Optoelectronics

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

The idea behind Miracll Chemicals Co and Aurora Optoelectronics Co 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 Stocks Directory module to find actively traded stocks across global markets.