Correlation Between Auras Technology and Pacific Construction

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

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

Diversification Opportunities for Auras Technology and Pacific Construction

0.02

Correlation Coefficient

Auras Technology  Pacific Construction

Significant diversification

The 3 months correlation between Auras and Pacific is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Auras Technology Co and Pacific Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Construction and Auras Technology 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 Auras Technology Co are associated (or correlated) with Pacific Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Construction has no effect on the direction of Auras Technology i.e., Auras Technology and Pacific Construction go up and down completely randomly.

Pair Corralation between Auras Technology and Pacific Construction

Assuming the 90 days trading horizon Auras Technology Co is expected to generate 0.91 times more return on investment than Pacific Construction. However, Auras Technology Co is 1.1 times less risky than Pacific Construction. It trades about -0.09 of its potential returns per unit of risk. Pacific Construction Co is currently generating about -0.1 per unit of risk. If you would invest  69,400  in Auras Technology Co on October 11, 2024 and sell it today you would lose (3,600) from holding Auras Technology Co or give up 5.19% of portfolio value over 90 days.

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

Auras Technology Co  vs.  Pacific Construction Co

Auras Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auras Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pacific Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pacific Construction is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Auras Technology and Pacific Construction

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

The idea behind Auras Technology Co and Pacific Construction 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.