Correlation Between Parx Plastics and Aures Technologies

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

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

Diversification Opportunities for Parx Plastics and Aures Technologies

0.55

Correlation Coefficient

Parx Plastics  Aures Technologies

Very weak diversification

The 3 months correlation between Parx and Aures is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Parx Plastics NV and Aures Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aures Technologies and Parx Plastics 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 Parx Plastics NV are associated (or correlated) with Aures Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aures Technologies has no effect on the direction of Parx Plastics i.e., Parx Plastics and Aures Technologies go up and down completely randomly.

Pair Corralation between Parx Plastics and Aures Technologies

Assuming the 90 days trading horizon Parx Plastics NV is expected to generate 13.93 times more return on investment than Aures Technologies. However, Parx Plastics is 13.93 times more volatile than Aures Technologies SA. It trades about 0.2 of its potential returns per unit of risk. Aures Technologies SA is currently generating about 0.06 per unit of risk. If you would invest  20.00  in Parx Plastics NV on October 10, 2024 and sell it today you would earn a total of  9.00  from holding Parx Plastics NV or generate 45.0% return on investment over 90 days.

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

Parx Plastics NV  vs.  Aures Technologies SA

Parx Plastics NV

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Parx Plastics NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Parx Plastics reported solid returns over the last few months and may actually be approaching a breakup point.

Aures Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aures Technologies SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Aures Technologies is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Parx Plastics and Aures Technologies

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

The idea behind Parx Plastics NV and Aures Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.