Correlation Between Aurora Investment and Sabien Technology

Can any of the company-specific risk be diversified away by investing in both Aurora Investment and Sabien 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 Aurora Investment and Sabien Technology 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 Sabien Technology Group, you can compare the effects of market volatilities on Aurora Investment and Sabien 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 Aurora Investment with a short position of Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and Sabien Technology.

Diversification Opportunities for Aurora Investment and Sabien Technology

0.19

Correlation Coefficient

Aurora Investment  Sabien Technology

Average diversification

The 3 months correlation between Aurora and Sabien is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Aurora Investment i.e., Aurora Investment and Sabien Technology go up and down completely randomly.

Pair Corralation between Aurora Investment and Sabien Technology

Assuming the 90 days trading horizon Aurora Investment is expected to generate 1.56 times less return on investment than Sabien Technology. But when comparing it to its historical volatility, Aurora Investment Trust is 3.32 times less risky than Sabien Technology. It trades about 0.03 of its potential returns per unit of risk. Sabien Technology Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,325  in Sabien Technology Group on October 3, 2024 and sell it today you would lose (25.00) from holding Sabien Technology Group or give up 1.89% of portfolio value over 90 days.

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

Aurora Investment Trust  vs.  Sabien Technology Group

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.

Sabien Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabien Technology Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Sabien Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Investment and Sabien Technology

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

The idea behind Aurora Investment Trust and Sabien Technology Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.