Correlation Between BIO UV and Aurea SA

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

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

Diversification Opportunities for BIO UV and Aurea SA

-0.35

Correlation Coefficient

BIO UV  Aurea SA

Very good diversification

The 3 months correlation between BIO and Aurea is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BIO UV Group and Aurea SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurea SA and BIO UV 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 BIO UV Group 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 BIO UV i.e., BIO UV and Aurea SA go up and down completely randomly.

Pair Corralation between BIO UV and Aurea SA

Assuming the 90 days trading horizon BIO UV Group is expected to under-perform the Aurea SA. In addition to that, BIO UV is 1.19 times more volatile than Aurea SA. It trades about -0.08 of its total potential returns per unit of risk. Aurea SA is currently generating about -0.03 per unit of volatility. If you would invest  548.00  in Aurea SA on December 29, 2024 and sell it today you would lose (18.00) from holding Aurea SA or give up 3.28% of portfolio value over 90 days.

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

BIO UV Group  vs.  Aurea SA

BIO UV Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days BIO UV Group 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

Very Weak

Over the last 90 days Aurea SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aurea SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BIO UV and Aurea SA

The main advantage of trading using opposite BIO UV and Aurea SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIO UV 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 BIO UV Group 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.