Correlation Between Aware and Creative Realities

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

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

Diversification Opportunities for Aware and Creative Realities

0.75

Correlation Coefficient

Aware  Creative Realities

Poor diversification

The 3 months correlation between Aware and Creative is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Creative Realities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Realities and Aware 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 Aware Inc are associated (or correlated) with Creative Realities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Realities has no effect on the direction of Aware i.e., Aware and Creative Realities go up and down completely randomly.

Pair Corralation between Aware and Creative Realities

Given the investment horizon of 90 days Aware is expected to generate 4.53 times less return on investment than Creative Realities. But when comparing it to its historical volatility, Aware Inc is 1.17 times less risky than Creative Realities. It trades about 0.01 of its potential returns per unit of risk. Creative Realities is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  171.00  in Creative Realities on September 28, 2024 and sell it today you would earn a total of  98.00  from holding Creative Realities or generate 57.31% return on investment over 90 days.

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

Aware Inc  vs.  Creative Realities

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Creative Realities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creative Realities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aware and Creative Realities

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

The idea behind Aware Inc and Creative Realities 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.