Correlation Between Aurora Investment and Chrysalis Investments

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

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

Diversification Opportunities for Aurora Investment and Chrysalis Investments

-0.73

Correlation Coefficient

Aurora Investment  Chrysalis Investments

Pay attention - limited upside

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

Pair Corralation between Aurora Investment and Chrysalis Investments

Assuming the 90 days trading horizon Aurora Investment Trust is expected to under-perform the Chrysalis Investments. But the stock apears to be less risky and, when comparing its historical volatility, Aurora Investment Trust is 1.13 times less risky than Chrysalis Investments. The stock trades about -0.09 of its potential returns per unit of risk. The Chrysalis Investments is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  9,330  in Chrysalis Investments on September 28, 2024 and sell it today you would earn a total of  1,450  from holding Chrysalis Investments or generate 15.54% return on investment over 90 days.

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

Aurora Investment Trust  vs.  Chrysalis Investments

Aurora Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Chrysalis Investments

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chrysalis Investments are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chrysalis Investments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Investment and Chrysalis Investments

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

The idea behind Aurora Investment Trust and Chrysalis 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.