Correlation Between Aware and Trust Stamp

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

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

Diversification Opportunities for Aware and Trust Stamp

-0.35

Correlation Coefficient

Aware  Trust Stamp

Very good diversification

The 3 months correlation between Aware and Trust is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Trust Stamp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Stamp 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 Trust Stamp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Stamp has no effect on the direction of Aware i.e., Aware and Trust Stamp go up and down completely randomly.

Pair Corralation between Aware and Trust Stamp

Given the investment horizon of 90 days Aware is expected to generate 8.23 times less return on investment than Trust Stamp. But when comparing it to its historical volatility, Aware Inc is 3.17 times less risky than Trust Stamp. It trades about 0.01 of its potential returns per unit of risk. Trust Stamp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  265.00  in Trust Stamp on September 28, 2024 and sell it today you would lose (194.00) from holding Trust Stamp or give up 73.21% of portfolio value over 90 days.

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

Aware Inc  vs.  Trust Stamp

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.

Trust Stamp

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trust Stamp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Trust Stamp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aware and Trust Stamp

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

The idea behind Aware Inc and Trust Stamp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.