Correlation Between Ecoslops and Aurea SA

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

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

Diversification Opportunities for Ecoslops and Aurea SA

-0.46

Correlation Coefficient

Ecoslops  Aurea SA

Very good diversification

The 3 months correlation between Ecoslops and Aurea is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ecoslops SA and Aurea SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurea SA and Ecoslops 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 Ecoslops SA are associated (or correlated) with Aurea SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurea SA has no effect on the direction of Ecoslops i.e., Ecoslops and Aurea SA go up and down completely randomly.

Pair Corralation between Ecoslops and Aurea SA

Assuming the 90 days trading horizon Ecoslops SA is expected to under-perform the Aurea SA. In addition to that, Ecoslops is 1.71 times more volatile than Aurea SA. It trades about -0.05 of its total potential returns per unit of risk. Aurea SA is currently generating about 0.08 per unit of volatility. If you would invest  522.00  in Aurea SA on December 2, 2024 and sell it today you would earn a total of  48.00  from holding Aurea SA or generate 9.2% return on investment over 90 days.

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

Ecoslops SA  vs.  Aurea SA

Ecoslops SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecoslops SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Aurea SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurea SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aurea SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ecoslops and Aurea SA

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

The idea behind Ecoslops SA and Aurea 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.