Correlation Between Aurubis AG and Cardinal Health

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

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

Diversification Opportunities for Aurubis AG and Cardinal Health

0.79

Correlation Coefficient

Aurubis AG  Cardinal Health

Poor diversification

The 3 months correlation between Aurubis and Cardinal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aurubis AG and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Aurubis AG 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 Aurubis AG are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Aurubis AG i.e., Aurubis AG and Cardinal Health go up and down completely randomly.

Pair Corralation between Aurubis AG and Cardinal Health

Assuming the 90 days horizon Aurubis AG is expected to generate 8.82 times less return on investment than Cardinal Health. In addition to that, Aurubis AG is 1.49 times more volatile than Cardinal Health. It trades about 0.01 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.09 per unit of volatility. If you would invest  6,300  in Cardinal Health on October 5, 2024 and sell it today you would earn a total of  5,065  from holding Cardinal Health or generate 80.4% return on investment over 90 days.

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

Aurubis AG  vs.  Cardinal Health

Aurubis AG

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Aurubis AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Aurubis AG reported solid returns over the last few months and may actually be approaching a breakup point.

Cardinal Health

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Cardinal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Cardinal Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurubis AG and Cardinal Health

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

The idea behind Aurubis AG and Cardinal Health 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.