Correlation Between Konan Technology and AurosTechnology

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

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

Diversification Opportunities for Konan Technology and AurosTechnology

0.36

Correlation Coefficient

Konan Technology  AurosTechnology

Weak diversification

The 3 months correlation between Konan and AurosTechnology is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Konan Technology and AurosTechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AurosTechnology and Konan 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 Konan Technology are associated (or correlated) with AurosTechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AurosTechnology has no effect on the direction of Konan Technology i.e., Konan Technology and AurosTechnology go up and down completely randomly.

Pair Corralation between Konan Technology and AurosTechnology

Assuming the 90 days trading horizon Konan Technology is expected to generate 17.5 times less return on investment than AurosTechnology. But when comparing it to its historical volatility, Konan Technology is 1.15 times less risky than AurosTechnology. It trades about 0.01 of its potential returns per unit of risk. AurosTechnology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,414,000  in AurosTechnology on November 29, 2024 and sell it today you would earn a total of  951,000  from holding AurosTechnology or generate 67.26% return on investment over 90 days.

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

Konan Technology  vs.  AurosTechnology

Konan Technology

Risk-Adjusted Performance

Very Weak

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

AurosTechnology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AurosTechnology are ranked lower than 13 (%) 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.

Pair Trading with Konan Technology and AurosTechnology

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

The idea behind Konan Technology and AurosTechnology 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.