Correlation Between Sapura Industrial and Aurelius Technologies

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

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

Diversification Opportunities for Sapura Industrial and Aurelius Technologies

0.6

Correlation Coefficient

Sapura Industrial  Aurelius Technologies

Poor diversification

The 3 months correlation between Sapura and Aurelius is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sapura Industrial Bhd 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 Sapura Industrial 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 Sapura Industrial Bhd 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 Sapura Industrial i.e., Sapura Industrial and Aurelius Technologies go up and down completely randomly.

Pair Corralation between Sapura Industrial and Aurelius Technologies

Assuming the 90 days trading horizon Sapura Industrial is expected to generate 2.34 times less return on investment than Aurelius Technologies. But when comparing it to its historical volatility, Sapura Industrial Bhd is 1.11 times less risky than Aurelius Technologies. It trades about 0.07 of its potential returns per unit of risk. Aurelius Technologies Bhd is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  291.00  in Aurelius Technologies Bhd on October 7, 2024 and sell it today you would earn a total of  58.00  from holding Aurelius Technologies Bhd or generate 19.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Sapura Industrial Bhd  vs.  Aurelius Technologies Bhd

Sapura Industrial Bhd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sapura Industrial Bhd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sapura Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aurelius Technologies Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelius Technologies Bhd are ranked lower than 11 (%) 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 Sapura Industrial and Aurelius Technologies

The main advantage of trading using opposite Sapura Industrial and Aurelius Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapura Industrial 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 Sapura Industrial Bhd 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.