Correlation Between TRON and AURO

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

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

Diversification Opportunities for TRON and AURO

0.94

Correlation Coefficient

TRON  AURO

Almost no diversification

The 3 months correlation between TRON and AURO is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding TRON and AURO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURO and TRON 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 TRON are associated (or correlated) with AURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURO has no effect on the direction of TRON i.e., TRON and AURO go up and down completely randomly.

Pair Corralation between TRON and AURO

Assuming the 90 days trading horizon TRON is expected to generate 1.68 times less return on investment than AURO. In addition to that, TRON is 1.11 times more volatile than AURO. It trades about 0.14 of its total potential returns per unit of risk. AURO is currently generating about 0.25 per unit of volatility. If you would invest  0.02  in AURO on September 1, 2024 and sell it today you would earn a total of  0.01  from holding AURO or generate 68.02% return on investment over 90 days.

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

TRON  vs.  AURO

TRON

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

AURO

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with TRON and AURO

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

The idea behind TRON and AURO 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 CEOs Directory module to screen CEOs from public companies around the world.