Correlation Between Barbara Bui and Aurea SA

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

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

Diversification Opportunities for Barbara Bui and Aurea SA

-0.33

Correlation Coefficient

Barbara Bui  Aurea SA

Very good diversification

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

Pair Corralation between Barbara Bui and Aurea SA

Assuming the 90 days trading horizon Barbara Bui SA is expected to under-perform the Aurea SA. In addition to that, Barbara Bui is 3.17 times more volatile than Aurea SA. It trades about -0.17 of its total potential returns per unit of risk. Aurea SA is currently generating about -0.03 per unit of volatility. If you would invest  548.00  in Aurea SA on December 29, 2024 and sell it today you would lose (18.00) from holding Aurea SA or give up 3.28% of portfolio value over 90 days.

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

Barbara Bui SA  vs.  Aurea SA

Barbara Bui SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barbara Bui SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aurea SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aurea SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aurea SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barbara Bui and Aurea SA

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

The idea behind Barbara Bui SA and Aurea SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.