Correlation Between Aeris Environmental and Thorney Technologies

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

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

Diversification Opportunities for Aeris Environmental and Thorney Technologies

0.35

Correlation Coefficient

Aeris Environmental  Thorney Technologies

Weak diversification

The 3 months correlation between Aeris and Thorney is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aeris Environmental and Thorney Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thorney Technologies and Aeris Environmental 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 Aeris Environmental are associated (or correlated) with Thorney Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thorney Technologies has no effect on the direction of Aeris Environmental i.e., Aeris Environmental and Thorney Technologies go up and down completely randomly.

Pair Corralation between Aeris Environmental and Thorney Technologies

Assuming the 90 days trading horizon Aeris Environmental is expected to generate 1.19 times more return on investment than Thorney Technologies. However, Aeris Environmental is 1.19 times more volatile than Thorney Technologies. It trades about 0.05 of its potential returns per unit of risk. Thorney Technologies is currently generating about 0.0 per unit of risk. If you would invest  3.80  in Aeris Environmental on October 24, 2024 and sell it today you would earn a total of  3.80  from holding Aeris Environmental or generate 100.0% return on investment over 90 days.

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

Aeris Environmental  vs.  Thorney Technologies

Aeris Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeris Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Thorney Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thorney Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Thorney Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aeris Environmental and Thorney Technologies

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

The idea behind Aeris Environmental and Thorney Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.