Correlation Between Aju IB and SV Investment

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

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

Diversification Opportunities for Aju IB and SV Investment

-0.73

Correlation Coefficient

Aju IB  SV Investment

Pay attention - limited upside

The 3 months correlation between Aju and 289080 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aju IB Investment and SV Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SV Investment and Aju IB 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 Aju IB Investment are associated (or correlated) with SV Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SV Investment has no effect on the direction of Aju IB i.e., Aju IB and SV Investment go up and down completely randomly.

Pair Corralation between Aju IB and SV Investment

Assuming the 90 days trading horizon Aju IB Investment is expected to generate 4.0 times more return on investment than SV Investment. However, Aju IB is 4.0 times more volatile than SV Investment. It trades about 0.19 of its potential returns per unit of risk. SV Investment is currently generating about -0.27 per unit of risk. If you would invest  202,500  in Aju IB Investment on September 1, 2024 and sell it today you would earn a total of  78,500  from holding Aju IB Investment or generate 38.77% return on investment over 90 days.

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

Aju IB Investment  vs.  SV Investment

Aju IB Investment

Risk-Adjusted Performance

8 of 100

OK

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

SV Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SV Investment 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aju IB and SV Investment

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

The idea behind Aju IB Investment and SV Investment 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.