Correlation Between CSE Global and Aurora Innovation

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

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

Diversification Opportunities for CSE Global and Aurora Innovation

0.83

Correlation Coefficient

CSE Global  Aurora Innovation

Very poor diversification

The 3 months correlation between CSE and Aurora is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CSE Global Limited and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and CSE Global 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 CSE Global Limited are associated (or correlated) with Aurora Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Innovation has no effect on the direction of CSE Global i.e., CSE Global and Aurora Innovation go up and down completely randomly.

Pair Corralation between CSE Global and Aurora Innovation

Assuming the 90 days horizon CSE Global Limited is expected to under-perform the Aurora Innovation. But the pink sheet apears to be less risky and, when comparing its historical volatility, CSE Global Limited is 5.25 times less risky than Aurora Innovation. The pink sheet trades about -0.34 of its potential returns per unit of risk. The Aurora Innovation is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Aurora Innovation on October 10, 2024 and sell it today you would earn a total of  27.00  from holding Aurora Innovation or generate 17.42% return on investment over 90 days.

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

CSE Global Limited  vs.  Aurora Innovation

CSE Global Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSE Global Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, CSE Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aurora Innovation

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with CSE Global and Aurora Innovation

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

The idea behind CSE Global Limited and Aurora Innovation 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 CEOs Directory module to screen CEOs from public companies around the world.