Correlation Between Aurora Investment and JLEN Environmental

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

By analyzing existing cross correlation between Aurora Investment Trust and JLEN Environmental Assets, you can compare the effects of market volatilities on Aurora Investment and JLEN Environmental 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 Aurora Investment with a short position of JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and JLEN Environmental.

Diversification Opportunities for Aurora Investment and JLEN Environmental

0.87

Correlation Coefficient

Aurora Investment  JLEN Environmental

Very poor diversification

The 3 months correlation between Aurora and JLEN is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets and Aurora Investment 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 Aurora Investment Trust are associated (or correlated) with JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Aurora Investment i.e., Aurora Investment and JLEN Environmental go up and down completely randomly.

Pair Corralation between Aurora Investment and JLEN Environmental

Assuming the 90 days trading horizon Aurora Investment Trust is expected to generate 1.02 times more return on investment than JLEN Environmental. However, Aurora Investment is 1.02 times more volatile than JLEN Environmental Assets. It trades about 0.06 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.07 per unit of risk. If you would invest  22,500  in Aurora Investment Trust on October 6, 2024 and sell it today you would earn a total of  300.00  from holding Aurora Investment Trust or generate 1.33% return on investment over 90 days.

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

Aurora Investment Trust  vs.  JLEN Environmental Assets

Aurora Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

JLEN Environmental Assets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JLEN Environmental Assets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aurora Investment and JLEN Environmental

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

The idea behind Aurora Investment Trust and JLEN Environmental Assets 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.