Correlation Between Aurea SA and Orege Socit

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

By analyzing existing cross correlation between Aurea SA and Orege Socit Anonyme, you can compare the effects of market volatilities on Aurea SA and Orege Socit 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 Orege Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurea SA and Orege Socit.

Diversification Opportunities for Aurea SA and Orege Socit

-0.33

Correlation Coefficient

Aurea SA  Orege Socit

Very good diversification

The 3 months correlation between Aurea and Orege is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aurea SA and Orege Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orege Socit Anonyme 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 Orege Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orege Socit Anonyme has no effect on the direction of Aurea SA i.e., Aurea SA and Orege Socit go up and down completely randomly.

Pair Corralation between Aurea SA and Orege Socit

Assuming the 90 days trading horizon Aurea SA is expected to under-perform the Orege Socit. But the stock apears to be less risky and, when comparing its historical volatility, Aurea SA is 1.57 times less risky than Orege Socit. The stock trades about -0.53 of its potential returns per unit of risk. The Orege Socit Anonyme is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Orege Socit Anonyme on September 4, 2024 and sell it today you would lose (2.00) from holding Orege Socit Anonyme or give up 5.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Aurea SA  vs.  Orege Socit Anonyme

Aurea SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurea SA are ranked lower than 2 (%) 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.

Orege Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orege Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Orege Socit 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 Aurea SA and Orege Socit

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

The idea behind Aurea SA and Orege Socit Anonyme 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.