Correlation Between Aura Investments and Rapac Communication

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

By analyzing existing cross correlation between Aura Investments and Rapac Communication Infrastructure, you can compare the effects of market volatilities on Aura Investments and Rapac Communication 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 Aura Investments with a short position of Rapac Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Investments and Rapac Communication.

Diversification Opportunities for Aura Investments and Rapac Communication

0.77

Correlation Coefficient

Aura Investments  Rapac Communication

Poor diversification

The 3 months correlation between Aura and Rapac is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aura Investments and Rapac Communication Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapac Communication and Aura Investments 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 Aura Investments are associated (or correlated) with Rapac Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapac Communication has no effect on the direction of Aura Investments i.e., Aura Investments and Rapac Communication go up and down completely randomly.

Pair Corralation between Aura Investments and Rapac Communication

Assuming the 90 days trading horizon Aura Investments is expected to generate 1.93 times more return on investment than Rapac Communication. However, Aura Investments is 1.93 times more volatile than Rapac Communication Infrastructure. It trades about 0.15 of its potential returns per unit of risk. Rapac Communication Infrastructure is currently generating about -0.04 per unit of risk. If you would invest  158,357  in Aura Investments on September 3, 2024 and sell it today you would earn a total of  25,843  from holding Aura Investments or generate 16.32% return on investment over 90 days.

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

Aura Investments  vs.  Rapac Communication Infrastruc

Aura Investments

Risk-Adjusted Performance

11 of 100

Good

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

Rapac Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rapac Communication Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Rapac Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aura Investments and Rapac Communication

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

The idea behind Aura Investments and Rapac Communication Infrastructure 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.