Correlation Between AURELIUS Equity and IMPERIAL TOBACCO

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

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

Diversification Opportunities for AURELIUS Equity and IMPERIAL TOBACCO

0.94

Correlation Coefficient

AURELIUS Equity  IMPERIAL TOBACCO

Almost no diversification

The 3 months correlation between AURELIUS and IMPERIAL is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding AURELIUS Equity Opportunities and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and AURELIUS Equity 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 AURELIUS Equity Opportunities are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of AURELIUS Equity i.e., AURELIUS Equity and IMPERIAL TOBACCO go up and down completely randomly.

Pair Corralation between AURELIUS Equity and IMPERIAL TOBACCO

If you would invest  8,160  in AURELIUS Equity Opportunities on October 23, 2024 and sell it today you would earn a total of  0.00  from holding AURELIUS Equity Opportunities or generate 0.0% return on investment over 90 days.

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

AURELIUS Equity Opportunities  vs.  IMPERIAL TOBACCO

AURELIUS Equity Oppo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AURELIUS Equity Opportunities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AURELIUS Equity unveiled solid returns over the last few months and may actually be approaching a breakup point.

IMPERIAL TOBACCO

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IMPERIAL TOBACCO are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, IMPERIAL TOBACCO unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AURELIUS Equity and IMPERIAL TOBACCO

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

The idea behind AURELIUS Equity Opportunities and IMPERIAL TOBACCO 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.