Correlation Between Aures Technologies and Soditech

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

Diversification Opportunities for Aures Technologies and Soditech

0.47

Correlation Coefficient

Aures Technologies  Soditech

Very weak diversification

The 3 months correlation between Aures and Soditech is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aures Technologies SA and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA 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 Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Aures Technologies i.e., Aures Technologies and Soditech go up and down completely randomly.

Pair Corralation between Aures Technologies and Soditech

Assuming the 90 days trading horizon Aures Technologies is expected to generate 72.14 times less return on investment than Soditech. But when comparing it to its historical volatility, Aures Technologies SA is 27.18 times less risky than Soditech. It trades about 0.04 of its potential returns per unit of risk. Soditech SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  104.00  in Soditech SA on December 22, 2024 and sell it today you would earn a total of  34.00  from holding Soditech SA or generate 32.69% return on investment over 90 days.

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

Aures Technologies SA  vs.  Soditech SA

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.

Soditech SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soditech SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Soditech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aures Technologies and Soditech

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

The idea behind Aures Technologies SA and Soditech SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.