Correlation Between Aurea SA and Bourse Direct

Can any of the company-specific risk be diversified away by investing in both Aurea SA and Bourse Direct 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 Aurea SA and Bourse Direct into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aurea SA and Bourse Direct

-0.58

Correlation Coefficient

Aurea SA  Bourse Direct

Excellent diversification

The 3 months correlation between Aurea and Bourse is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aurea SA and Bourse Direct SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bourse Direct SA and Aurea SA 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 Aurea SA are associated (or correlated) with Bourse Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bourse Direct SA has no effect on the direction of Aurea SA i.e., Aurea SA and Bourse Direct go up and down completely randomly.

Pair Corralation between Aurea SA and Bourse Direct

Assuming the 90 days trading horizon Aurea SA is expected to generate 1.73 times more return on investment than Bourse Direct. However, Aurea SA is 1.73 times more volatile than Bourse Direct SA. It trades about 0.02 of its potential returns per unit of risk. Bourse Direct SA is currently generating about -0.17 per unit of risk. If you would invest  502.00  in Aurea SA on September 5, 2024 and sell it today you would earn a total of  10.00  from holding Aurea SA or generate 1.99% return on investment over 90 days.

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

Aurea SA  vs.  Bourse Direct SA

Aurea SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurea SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Aurea SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bourse Direct SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bourse Direct SA 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 fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aurea SA and Bourse Direct

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

The idea behind Aurea SA and Bourse Direct SA 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.