Correlation Between IOC and AURORAC

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

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

Diversification Opportunities for IOC and AURORAC

0.0

Correlation Coefficient

IOC  AURORAC

Pay attention - limited upside

The 3 months correlation between IOC and AURORAC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IOC and AURORAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURORAC and IOC 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 IOC are associated (or correlated) with AURORAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURORAC has no effect on the direction of IOC i.e., IOC and AURORAC go up and down completely randomly.

Pair Corralation between IOC and AURORAC

If you would invest  0.77  in IOC on August 30, 2024 and sell it today you would earn a total of  0.48  from holding IOC or generate 62.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

IOC  vs.  AURORAC

IOC

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IOC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, IOC exhibited solid returns over the last few months and may actually be approaching a breakup point.

AURORAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AURORAC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AURORAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IOC and AURORAC

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

The idea behind IOC and AURORAC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.