Correlation Between Aura FAT and Denali Capital

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

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

Diversification Opportunities for Aura FAT and Denali Capital

0.41

Correlation Coefficient

Aura FAT  Denali Capital

Very weak diversification

The 3 months correlation between Aura and Denali is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aura FAT Projects and Denali Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Capital Acqui and Aura FAT 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 Aura FAT Projects are associated (or correlated) with Denali Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Capital Acqui has no effect on the direction of Aura FAT i.e., Aura FAT and Denali Capital go up and down completely randomly.

Pair Corralation between Aura FAT and Denali Capital

If you would invest  1,153  in Denali Capital Acquisition on September 12, 2024 and sell it today you would earn a total of  26.00  from holding Denali Capital Acquisition or generate 2.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Aura FAT Projects  vs.  Denali Capital Acquisition

Aura FAT Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aura FAT Projects has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aura FAT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Denali Capital Acqui

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Denali Capital Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Denali Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aura FAT and Denali Capital

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

The idea behind Aura FAT Projects and Denali Capital Acquisition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.