Correlation Between Eline Entertainment and Aurora Solar

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

By analyzing existing cross correlation between Eline Entertainment Group and Aurora Solar Technologies, you can compare the effects of market volatilities on Eline Entertainment and Aurora Solar 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 Eline Entertainment with a short position of Aurora Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eline Entertainment and Aurora Solar.

Diversification Opportunities for Eline Entertainment and Aurora Solar

-0.54

Correlation Coefficient

Eline Entertainment  Aurora Solar

Excellent diversification

The 3 months correlation between Eline and Aurora is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eline Entertainment Group and Aurora Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Solar Technologies and Eline Entertainment 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 Eline Entertainment Group are associated (or correlated) with Aurora Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Solar Technologies has no effect on the direction of Eline Entertainment i.e., Eline Entertainment and Aurora Solar go up and down completely randomly.

Pair Corralation between Eline Entertainment and Aurora Solar

Given the investment horizon of 90 days Eline Entertainment Group is expected to generate 3.66 times more return on investment than Aurora Solar. However, Eline Entertainment is 3.66 times more volatile than Aurora Solar Technologies. It trades about 0.17 of its potential returns per unit of risk. Aurora Solar Technologies is currently generating about 0.0 per unit of risk. If you would invest  0.01  in Eline Entertainment Group on September 4, 2024 and sell it today you would earn a total of  0.01  from holding Eline Entertainment Group or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Eline Entertainment Group  vs.  Aurora Solar Technologies

Eline Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eline Entertainment Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Eline Entertainment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aurora Solar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Solar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aurora Solar is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eline Entertainment and Aurora Solar

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

The idea behind Eline Entertainment Group and Aurora Solar Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.