Correlation Between AurosTechnology and DC Media

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

By analyzing existing cross correlation between AurosTechnology and DC Media CoLtd, you can compare the effects of market volatilities on AurosTechnology and DC Media 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 AurosTechnology with a short position of DC Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of AurosTechnology and DC Media.

Diversification Opportunities for AurosTechnology and DC Media

-0.42

Correlation Coefficient

AurosTechnology  DC Media

Very good diversification

The 3 months correlation between AurosTechnology and 263720 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding AurosTechnology and DC Media CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC Media CoLtd and AurosTechnology 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 AurosTechnology are associated (or correlated) with DC Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC Media CoLtd has no effect on the direction of AurosTechnology i.e., AurosTechnology and DC Media go up and down completely randomly.

Pair Corralation between AurosTechnology and DC Media

Assuming the 90 days trading horizon AurosTechnology is expected to generate 1.88 times more return on investment than DC Media. However, AurosTechnology is 1.88 times more volatile than DC Media CoLtd. It trades about 0.19 of its potential returns per unit of risk. DC Media CoLtd is currently generating about 0.0 per unit of risk. If you would invest  1,361,000  in AurosTechnology on December 1, 2024 and sell it today you would earn a total of  1,064,000  from holding AurosTechnology or generate 78.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

AurosTechnology  vs.  DC Media CoLtd

AurosTechnology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AurosTechnology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AurosTechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

DC Media CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days DC Media CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DC Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AurosTechnology and DC Media

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

The idea behind AurosTechnology and DC Media CoLtd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.