Correlation Between Aurora Solar and Environmental Waste

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

By analyzing existing cross correlation between Aurora Solar Technologies and Environmental Waste International, you can compare the effects of market volatilities on Aurora Solar and Environmental Waste 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 Aurora Solar with a short position of Environmental Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Solar and Environmental Waste.

Diversification Opportunities for Aurora Solar and Environmental Waste

0.07

Correlation Coefficient

Aurora Solar  Environmental Waste

Significant diversification

The 3 months correlation between Aurora and Environmental is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Solar Technologies and Environmental Waste Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmental Waste and Aurora Solar 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 Aurora Solar Technologies are associated (or correlated) with Environmental Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmental Waste has no effect on the direction of Aurora Solar i.e., Aurora Solar and Environmental Waste go up and down completely randomly.

Pair Corralation between Aurora Solar and Environmental Waste

If you would invest  3.50  in Aurora Solar Technologies on September 2, 2024 and sell it today you would lose (1.00) from holding Aurora Solar Technologies or give up 28.57% of portfolio value over 90 days.

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

Aurora Solar Technologies  vs.  Environmental Waste Internatio

Aurora Solar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Environmental Waste

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Environmental Waste International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Environmental Waste 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 Aurora Solar and Environmental Waste

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

The idea behind Aurora Solar Technologies and Environmental Waste International 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.