Correlation Between Aumann AG and Arista Power

Can any of the company-specific risk be diversified away by investing in both Aumann AG and Arista Power 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 Aumann AG and Arista Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aumann AG and Arista Power

0.0

Correlation Coefficient

Aumann AG  Arista Power

Pay attention - limited upside

The 3 months correlation between Aumann and Arista is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aumann AG and Arista Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arista Power and Aumann AG 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 Aumann AG are associated (or correlated) with Arista Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arista Power has no effect on the direction of Aumann AG i.e., Aumann AG and Arista Power go up and down completely randomly.

Pair Corralation between Aumann AG and Arista Power

If you would invest  1,050  in Aumann AG on December 29, 2024 and sell it today you would earn a total of  250.00  from holding Aumann AG or generate 23.81% return on investment over 90 days.

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

Aumann AG  vs.  Arista Power

Aumann AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aumann AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Aumann AG reported solid returns over the last few months and may actually be approaching a breakup point.

Arista Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arista Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arista Power is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aumann AG and Arista Power

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

The idea behind Aumann AG and Arista Power 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.