Correlation Between AuraSource and RWE AG

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

By analyzing existing cross correlation between AuraSource and RWE AG PK, you can compare the effects of market volatilities on AuraSource and RWE AG 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 AuraSource with a short position of RWE AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of AuraSource and RWE AG.

Diversification Opportunities for AuraSource and RWE AG

0.0

Correlation Coefficient

AuraSource  RWE AG

Pay attention - limited upside

The 3 months correlation between AuraSource and RWE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AuraSource and RWE AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RWE AG PK and AuraSource 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 AuraSource are associated (or correlated) with RWE AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RWE AG PK has no effect on the direction of AuraSource i.e., AuraSource and RWE AG go up and down completely randomly.

Pair Corralation between AuraSource and RWE AG

If you would invest  2,958  in RWE AG PK on December 29, 2024 and sell it today you would earn a total of  635.00  from holding RWE AG PK or generate 21.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

AuraSource  vs.  RWE AG PK

AuraSource

Risk-Adjusted Performance

Very Weak

Over the last 90 days AuraSource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AuraSource is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

RWE AG PK

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RWE AG PK are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, RWE AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AuraSource and RWE AG

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

The idea behind AuraSource and RWE AG PK 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.