Correlation Between Aurubis AG and Shenandoah Telecommunicatio

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

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

Diversification Opportunities for Aurubis AG and Shenandoah Telecommunicatio

0.06

Correlation Coefficient

Aurubis AG  Shenandoah Telecommunicatio

Significant diversification

The 3 months correlation between Aurubis and Shenandoah is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aurubis AG and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio and Aurubis AG 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 Aurubis AG are associated (or correlated) with Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Aurubis AG i.e., Aurubis AG and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between Aurubis AG and Shenandoah Telecommunicatio

Assuming the 90 days trading horizon Aurubis AG is expected to generate 1.08 times more return on investment than Shenandoah Telecommunicatio. However, Aurubis AG is 1.08 times more volatile than Shenandoah Telecommunications. It trades about 0.05 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about -0.11 per unit of risk. If you would invest  7,605  in Aurubis AG on September 24, 2024 and sell it today you would earn a total of  185.00  from holding Aurubis AG or generate 2.43% return on investment over 90 days.

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

Aurubis AG  vs.  Shenandoah Telecommunications

Aurubis AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurubis AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Aurubis AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Aurubis AG and Shenandoah Telecommunicatio

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

The idea behind Aurubis AG and Shenandoah Telecommunications 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.