Correlation Between Aeluma and Renesas Electronics

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

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

Diversification Opportunities for Aeluma and Renesas Electronics

-0.25

Correlation Coefficient

Aeluma  Renesas Electronics

Very good diversification

The 3 months correlation between Aeluma and Renesas is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aeluma Inc and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of Aeluma i.e., Aeluma and Renesas Electronics go up and down completely randomly.

Pair Corralation between Aeluma and Renesas Electronics

Given the investment horizon of 90 days Aeluma Inc is expected to generate 1.84 times more return on investment than Renesas Electronics. However, Aeluma is 1.84 times more volatile than Renesas Electronics. It trades about 0.09 of its potential returns per unit of risk. Renesas Electronics is currently generating about 0.0 per unit of risk. If you would invest  248.00  in Aeluma Inc on September 23, 2024 and sell it today you would earn a total of  602.00  from holding Aeluma Inc or generate 242.74% 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.  Renesas Electronics

Aeluma Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeluma Inc are ranked lower than 15 (%) 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.

Renesas Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renesas Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Renesas Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aeluma and Renesas Electronics

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

The idea behind Aeluma Inc and Renesas Electronics 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.