Correlation Between Archer Materials and Aeluma

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

By analyzing existing cross correlation between Archer Materials Limited and Aeluma Inc, you can compare the effects of market volatilities on Archer Materials and Aeluma 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 Archer Materials with a short position of Aeluma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Materials and Aeluma.

Diversification Opportunities for Archer Materials and Aeluma

0.58

Correlation Coefficient

Archer Materials  Aeluma

Very weak diversification

The 3 months correlation between Archer and Aeluma is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Archer Materials Limited and Aeluma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeluma Inc and Archer Materials 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 Archer Materials Limited are associated (or correlated) with Aeluma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeluma Inc has no effect on the direction of Archer Materials i.e., Archer Materials and Aeluma go up and down completely randomly.

Pair Corralation between Archer Materials and Aeluma

Assuming the 90 days horizon Archer Materials is expected to generate 3.53 times less return on investment than Aeluma. But when comparing it to its historical volatility, Archer Materials Limited is 2.16 times less risky than Aeluma. It trades about 0.2 of its potential returns per unit of risk. Aeluma Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  355.00  in Aeluma Inc on September 23, 2024 and sell it today you would earn a total of  495.00  from holding Aeluma Inc or generate 139.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Archer Materials Limited  vs.  Aeluma Inc

Archer Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Materials Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Archer Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Aeluma Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeluma Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Aeluma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Archer Materials and Aeluma

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

The idea behind Archer Materials Limited and Aeluma Inc 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.