Correlation Between Anzu Special and Aurora Technology

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

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

Diversification Opportunities for Anzu Special and Aurora Technology

-0.31

Correlation Coefficient

Anzu Special  Aurora Technology

Very good diversification

The 3 months correlation between Anzu and Aurora is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Anzu Special Acquisition and Aurora Technology Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Technology and Anzu Special 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 Anzu Special Acquisition are associated (or correlated) with Aurora Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Technology has no effect on the direction of Anzu Special i.e., Anzu Special and Aurora Technology go up and down completely randomly.

Pair Corralation between Anzu Special and Aurora Technology

Given the investment horizon of 90 days Anzu Special is expected to generate 53.57 times less return on investment than Aurora Technology. But when comparing it to its historical volatility, Anzu Special Acquisition is 62.0 times less risky than Aurora Technology. It trades about 0.07 of its potential returns per unit of risk. Aurora Technology Acquisition is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.58  in Aurora Technology Acquisition on September 18, 2024 and sell it today you would lose (0.73) from holding Aurora Technology Acquisition or give up 28.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.23%
Values	Daily Returns

Anzu Special Acquisition  vs.  Aurora Technology Acquisition

Anzu Special Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anzu Special Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Anzu Special is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Aurora Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Technology Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Aurora Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Anzu Special and Aurora Technology

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

The idea behind Anzu Special Acquisition and Aurora Technology Acquisition 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.