Correlation Between Aeluma and Arteris

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

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

Diversification Opportunities for Aeluma and Arteris

0.72

Correlation Coefficient

Aeluma  Arteris

Poor diversification

The 3 months correlation between Aeluma and Arteris is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aeluma Inc and Arteris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteris and Aeluma 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 Aeluma Inc are associated (or correlated) with Arteris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteris has no effect on the direction of Aeluma i.e., Aeluma and Arteris go up and down completely randomly.

Pair Corralation between Aeluma and Arteris

Given the investment horizon of 90 days Aeluma Inc is expected to generate 1.72 times more return on investment than Arteris. However, Aeluma is 1.72 times more volatile than Arteris. It trades about 0.07 of its potential returns per unit of risk. Arteris is currently generating about 0.05 per unit of risk. If you would invest  290.00  in Aeluma Inc on October 22, 2024 and sell it today you would earn a total of  407.00  from holding Aeluma Inc or generate 140.34% return on investment over 90 days.

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

Aeluma Inc  vs.  Arteris

Aeluma Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeluma Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Aeluma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Arteris

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arteris are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Arteris reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeluma and Arteris

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

The idea behind Aeluma Inc and Arteris 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .