Correlation Between Aura Investments and Trucknet Enterprise

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

By analyzing existing cross correlation between Aura Investments and Trucknet Enterprise, you can compare the effects of market volatilities on Aura Investments and Trucknet Enterprise 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 Trucknet Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Investments and Trucknet Enterprise.

Diversification Opportunities for Aura Investments and Trucknet Enterprise

0.18

Correlation Coefficient

Aura Investments  Trucknet Enterprise

Average diversification

The 3 months correlation between Aura and Trucknet is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aura Investments and Trucknet Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trucknet Enterprise 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 Trucknet Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trucknet Enterprise has no effect on the direction of Aura Investments i.e., Aura Investments and Trucknet Enterprise go up and down completely randomly.

Pair Corralation between Aura Investments and Trucknet Enterprise

Assuming the 90 days trading horizon Aura Investments is expected to under-perform the Trucknet Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Aura Investments is 2.09 times less risky than Trucknet Enterprise. The stock trades about -0.14 of its potential returns per unit of risk. The Trucknet Enterprise is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  10,970  in Trucknet Enterprise on December 30, 2024 and sell it today you would lose (1,630) from holding Trucknet Enterprise or give up 14.86% of portfolio value over 90 days.

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

Aura Investments  vs.  Trucknet Enterprise

Aura Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aura Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Trucknet Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trucknet Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aura Investments and Trucknet Enterprise

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

The idea behind Aura Investments and Trucknet Enterprise 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.