Correlation Between Aures Technologies and Union Technologies

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

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

Diversification Opportunities for Aures Technologies and Union Technologies

0.21

Correlation Coefficient

Aures Technologies  Union Technologies

Modest diversification

The 3 months correlation between Aures and Union is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aures Technologies SA and Union Technologies Informatiqu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Technologies and Aures Technologies 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 Aures Technologies SA are associated (or correlated) with Union Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Technologies has no effect on the direction of Aures Technologies i.e., Aures Technologies and Union Technologies go up and down completely randomly.

Pair Corralation between Aures Technologies and Union Technologies

Assuming the 90 days trading horizon Aures Technologies is expected to generate 54.95 times less return on investment than Union Technologies. But when comparing it to its historical volatility, Aures Technologies SA is 41.94 times less risky than Union Technologies. It trades about 0.04 of its potential returns per unit of risk. Union Technologies Informatique is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Union Technologies Informatique on December 21, 2024 and sell it today you would earn a total of  2.00  from holding Union Technologies Informatique or generate 10.0% return on investment over 90 days.

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

Aures Technologies SA  vs.  Union Technologies Informatiqu

Aures Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aures Technologies SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Aures Technologies is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Union Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Union Technologies Informatique are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Union Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aures Technologies and Union Technologies

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

The idea behind Aures Technologies SA and Union Technologies Informatique 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.