Correlation Between Augwind Energy and Shemen Industries

Can any of the company-specific risk be diversified away by investing in both Augwind Energy and Shemen Industries 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 Augwind Energy and Shemen Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Augwind Energy and Shemen Industries

0.65

Correlation Coefficient

Augwind Energy  Shemen Industries

Poor diversification

The 3 months correlation between Augwind and Shemen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Augwind Energy Tech and Shemen Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shemen Industries and Augwind Energy 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 Augwind Energy Tech are associated (or correlated) with Shemen Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shemen Industries has no effect on the direction of Augwind Energy i.e., Augwind Energy and Shemen Industries go up and down completely randomly.

Pair Corralation between Augwind Energy and Shemen Industries

Assuming the 90 days trading horizon Augwind Energy Tech is expected to generate 2.07 times more return on investment than Shemen Industries. However, Augwind Energy is 2.07 times more volatile than Shemen Industries. It trades about 0.28 of its potential returns per unit of risk. Shemen Industries is currently generating about 0.26 per unit of risk. If you would invest  28,880  in Augwind Energy Tech on September 29, 2024 and sell it today you would earn a total of  26,120  from holding Augwind Energy Tech or generate 90.44% return on investment over 90 days.

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

Augwind Energy Tech  vs.  Shemen Industries

Augwind Energy Tech

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Augwind Energy Tech are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Augwind Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Shemen Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shemen Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Shemen Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Augwind Energy and Shemen Industries

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

The idea behind Augwind Energy Tech and Shemen Industries 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.