Correlation Between Aeluma and Guerrilla

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

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

Diversification Opportunities for Aeluma and Guerrilla

-0.29

Correlation Coefficient

Aeluma  Guerrilla

Very good diversification

The 3 months correlation between Aeluma and Guerrilla is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aeluma Inc and Guerrilla RF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerrilla RF 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 Guerrilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerrilla RF has no effect on the direction of Aeluma i.e., Aeluma and Guerrilla go up and down completely randomly.

Pair Corralation between Aeluma and Guerrilla

Given the investment horizon of 90 days Aeluma Inc is expected to generate 1.16 times more return on investment than Guerrilla. However, Aeluma is 1.16 times more volatile than Guerrilla RF. It trades about 0.22 of its potential returns per unit of risk. Guerrilla RF is currently generating about -0.05 per unit of risk. If you would invest  315.00  in Aeluma Inc on October 6, 2024 and sell it today you would earn a total of  468.00  from holding Aeluma Inc or generate 148.57% return on investment over 90 days.

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

Aeluma Inc  vs.  Guerrilla RF

Aeluma Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeluma Inc are ranked lower than 13 (%) 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.

Guerrilla RF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerrilla RF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Aeluma and Guerrilla

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

The idea behind Aeluma Inc and Guerrilla RF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.