Correlation Between Aurora Solar and Pure Energy

Can any of the company-specific risk be diversified away by investing in both Aurora Solar and Pure Energy 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 Pure Energy 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 Pure Energy Minerals, you can compare the effects of market volatilities on Aurora Solar and Pure Energy 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 Pure Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Solar and Pure Energy.

Diversification Opportunities for Aurora Solar and Pure Energy

-0.08

Correlation Coefficient

Aurora Solar  Pure Energy

Good diversification

The 3 months correlation between Aurora and Pure is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Solar Technologies and Pure Energy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Energy Minerals 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 Pure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Energy Minerals has no effect on the direction of Aurora Solar i.e., Aurora Solar and Pure Energy go up and down completely randomly.

Pair Corralation between Aurora Solar and Pure Energy

Assuming the 90 days horizon Aurora Solar Technologies is expected to under-perform the Pure Energy. In addition to that, Aurora Solar is 2.11 times more volatile than Pure Energy Minerals. It trades about -0.02 of its total potential returns per unit of risk. Pure Energy Minerals is currently generating about 0.01 per unit of volatility. If you would invest  30.00  in Pure Energy Minerals on October 6, 2024 and sell it today you would lose (2.00) from holding Pure Energy Minerals or give up 6.67% of portfolio value over 90 days.

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

Aurora Solar Technologies  vs.  Pure Energy Minerals

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 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.

Pure Energy Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pure Energy Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pure Energy 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 Pure Energy

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

The idea behind Aurora Solar Technologies and Pure Energy Minerals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.