Correlation Between Sure Tech and Aura Investments

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

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

Diversification Opportunities for Sure Tech and Aura Investments

0.74

Correlation Coefficient

Sure Tech  Aura Investments

Poor diversification

The 3 months correlation between Sure and Aura is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sure Tech Investments LP and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Sure Tech 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 Sure Tech Investments LP 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 Sure Tech i.e., Sure Tech and Aura Investments go up and down completely randomly.

Pair Corralation between Sure Tech and Aura Investments

Assuming the 90 days trading horizon Sure Tech is expected to generate 1.93 times less return on investment than Aura Investments. In addition to that, Sure Tech is 1.43 times more volatile than Aura Investments. It trades about 0.04 of its total potential returns per unit of risk. Aura Investments is currently generating about 0.11 per unit of volatility. If you would invest  186,300  in Aura Investments on December 2, 2024 and sell it today you would earn a total of  24,800  from holding Aura Investments or generate 13.31% return on investment over 90 days.

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

Sure Tech Investments LP  vs.  Aura Investments

Sure Tech Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sure Tech Investments LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sure Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Sure Tech and Aura Investments

The main advantage of trading using opposite Sure Tech and Aura Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sure Tech 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 Sure Tech Investments LP 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.