Correlation Between Blue World and Aurora Technology

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

By analyzing existing cross correlation between Blue World Acquisition and Aurora Technology Acquisition, you can compare the effects of market volatilities on Blue World and Aurora Technology 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 Blue World with a short position of Aurora Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue World and Aurora Technology.

Diversification Opportunities for Blue World and Aurora Technology

0.0

Correlation Coefficient

Blue World  Aurora Technology

Pay attention - limited upside

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

Pair Corralation between Blue World and Aurora Technology

Assuming the 90 days horizon Blue World Acquisition is expected to generate 8.45 times more return on investment than Aurora Technology. However, Blue World is 8.45 times more volatile than Aurora Technology Acquisition. It trades about 0.12 of its potential returns per unit of risk. Aurora Technology Acquisition is currently generating about 0.11 per unit of risk. If you would invest  8.10  in Blue World Acquisition on October 11, 2024 and sell it today you would earn a total of  14.90  from holding Blue World Acquisition or generate 183.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	28.39%
Values	Daily Returns

Blue World Acquisition  vs.  Aurora Technology Acquisition

Blue World Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Blue World is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aurora Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Technology Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Aurora Technology 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 Blue World and Aurora Technology

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

The idea behind Blue World Acquisition and Aurora Technology Acquisition 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.