Correlation Between Aurora Innovation and SES SA

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

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

Diversification Opportunities for Aurora Innovation and SES SA

0.08

Correlation Coefficient

Aurora Innovation  SES SA

Significant diversification

The 3 months correlation between Aurora and SES is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and SES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES SA and Aurora Innovation 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 Innovation are associated (or correlated) with SES SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES SA has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and SES SA go up and down completely randomly.

Pair Corralation between Aurora Innovation and SES SA

Considering the 90-day investment horizon Aurora Innovation is expected to generate 3.29 times less return on investment than SES SA. In addition to that, Aurora Innovation is 1.53 times more volatile than SES SA. It trades about 0.04 of its total potential returns per unit of risk. SES SA is currently generating about 0.22 per unit of volatility. If you would invest  316.00  in SES SA on December 27, 2024 and sell it today you would earn a total of  288.00  from holding SES SA or generate 91.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Aurora Innovation  vs.  SES SA

Aurora Innovation

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Innovation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Aurora Innovation reported solid returns over the last few months and may actually be approaching a breakup point.

SES SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SES SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SES SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Innovation and SES SA

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

The idea behind Aurora Innovation and SES SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.