Correlation Between Aubay Socit and IT Link

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

By analyzing existing cross correlation between Aubay Socit Anonyme and IT Link, you can compare the effects of market volatilities on Aubay Socit and IT Link 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 Aubay Socit with a short position of IT Link. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aubay Socit and IT Link.

Diversification Opportunities for Aubay Socit and IT Link

0.11

Correlation Coefficient

Aubay Socit  IT Link

Average diversification

The 3 months correlation between Aubay and ALITL is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aubay Socit Anonyme and IT Link in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IT Link and Aubay Socit 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 Aubay Socit Anonyme are associated (or correlated) with IT Link. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IT Link has no effect on the direction of Aubay Socit i.e., Aubay Socit and IT Link go up and down completely randomly.

Pair Corralation between Aubay Socit and IT Link

Assuming the 90 days trading horizon Aubay Socit Anonyme is expected to generate 0.94 times more return on investment than IT Link. However, Aubay Socit Anonyme is 1.07 times less risky than IT Link. It trades about 0.07 of its potential returns per unit of risk. IT Link is currently generating about -0.03 per unit of risk. If you would invest  4,505  in Aubay Socit Anonyme on December 30, 2024 and sell it today you would earn a total of  295.00  from holding Aubay Socit Anonyme or generate 6.55% return on investment over 90 days.

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

Aubay Socit Anonyme  vs.  IT Link

Aubay Socit Anonyme

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aubay Socit Anonyme are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Aubay Socit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

IT Link

Risk-Adjusted Performance

Very Weak

Over the last 90 days IT Link has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IT Link is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aubay Socit and IT Link

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

The idea behind Aubay Socit Anonyme and IT Link 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.