Correlation Between Insuline Medical and Aura Investments

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

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

Diversification Opportunities for Insuline Medical and Aura Investments

-0.76

Correlation Coefficient

Insuline Medical  Aura Investments

Pay attention - limited upside

The 3 months correlation between Insuline and Aura is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Insuline Medical and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Insuline Medical 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 Insuline Medical are associated (or correlated) with Aura Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Investments has no effect on the direction of Insuline Medical i.e., Insuline Medical and Aura Investments go up and down completely randomly.

Pair Corralation between Insuline Medical and Aura Investments

Assuming the 90 days trading horizon Insuline Medical is expected to under-perform the Aura Investments. In addition to that, Insuline Medical is 1.73 times more volatile than Aura Investments. It trades about -0.13 of its total potential returns per unit of risk. Aura Investments is currently generating about -0.2 per unit of volatility. If you would invest  230,000  in Aura Investments on December 2, 2024 and sell it today you would lose (18,900) from holding Aura Investments or give up 8.22% of portfolio value over 90 days.

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

Insuline Medical  vs.  Aura Investments

Insuline Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insuline Medical 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 basic 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.

Aura Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aura Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Insuline Medical and Aura Investments

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

The idea behind Insuline Medical and Aura Investments 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.