Correlation Between Nice and Aura Investments

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

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

Diversification Opportunities for Nice and Aura Investments

0.87

Correlation Coefficient

Nice  Aura Investments

Very poor diversification

The 3 months correlation between Nice and Aura is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments and Nice 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 Nice are associated (or correlated) with Aura Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Investments has no effect on the direction of Nice i.e., Nice and Aura Investments go up and down completely randomly.

Pair Corralation between Nice and Aura Investments

Assuming the 90 days trading horizon Nice is expected to under-perform the Aura Investments. But the stock apears to be less risky and, when comparing its historical volatility, Nice is 1.32 times less risky than Aura Investments. The stock trades about -0.06 of its potential returns per unit of risk. The Aura Investments is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  131,844  in Aura Investments on February 8, 2024 and sell it today you would earn a total of  16,356  from holding Aura Investments or generate 12.41% return on investment over 90 days.

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

Nice  vs.  Aura Investments

Nice

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nice are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aura Investments

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Investments are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aura Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nice and Aura Investments

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

The idea behind Nice and Aura Investments 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.