Correlation Between Aurea SA and Augros Cosmetic

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

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

Diversification Opportunities for Aurea SA and Augros Cosmetic

0.52

Correlation Coefficient

Aurea SA  Augros Cosmetic

Very weak diversification

The 3 months correlation between Aurea and Augros is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aurea SA and Augros Cosmetic Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Augros Cosmetic Packaging and Aurea SA 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 Aurea SA are associated (or correlated) with Augros Cosmetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Augros Cosmetic Packaging has no effect on the direction of Aurea SA i.e., Aurea SA and Augros Cosmetic go up and down completely randomly.

Pair Corralation between Aurea SA and Augros Cosmetic

Assuming the 90 days trading horizon Aurea SA is expected to under-perform the Augros Cosmetic. In addition to that, Aurea SA is 1.41 times more volatile than Augros Cosmetic Packaging. It trades about -0.22 of its total potential returns per unit of risk. Augros Cosmetic Packaging is currently generating about -0.05 per unit of volatility. If you would invest  740.00  in Augros Cosmetic Packaging on September 15, 2024 and sell it today you would lose (20.00) from holding Augros Cosmetic Packaging or give up 2.7% of portfolio value over 90 days.

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

Aurea SA  vs.  Augros Cosmetic Packaging

Aurea SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurea SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aurea SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Augros Cosmetic Packaging

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Augros Cosmetic Packaging are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Augros Cosmetic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurea SA and Augros Cosmetic

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

The idea behind Aurea SA and Augros Cosmetic Packaging 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 Stocks Directory module to find actively traded stocks across global markets.