Correlation Between Hanesbrands and Aura Energy

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

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

Diversification Opportunities for Hanesbrands and Aura Energy

0.69

Correlation Coefficient

Hanesbrands  Aura Energy

Poor diversification

The 3 months correlation between Hanesbrands and Aura is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Aura Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Energy Limited and Hanesbrands 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 Hanesbrands are associated (or correlated) with Aura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Energy Limited has no effect on the direction of Hanesbrands i.e., Hanesbrands and Aura Energy go up and down completely randomly.

Pair Corralation between Hanesbrands and Aura Energy

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Aura Energy. But the stock apears to be less risky and, when comparing its historical volatility, Hanesbrands is 1.26 times less risky than Aura Energy. The stock trades about -0.15 of its potential returns per unit of risk. The Aura Energy Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Aura Energy Limited on December 29, 2024 and sell it today you would lose (1.00) from holding Aura Energy Limited or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Hanesbrands  vs.  Aura Energy Limited

Hanesbrands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanesbrands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Aura Energy Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aura Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Aura Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hanesbrands and Aura Energy

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

The idea behind Hanesbrands and Aura Energy Limited 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 Stocks Directory module to find actively traded stocks across global markets.