Correlation Between Aurora Solar and Frontier Lithium

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

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

Diversification Opportunities for Aurora Solar and Frontier Lithium

-0.33

Correlation Coefficient

Aurora Solar  Frontier Lithium

Very good diversification

The 3 months correlation between Aurora and Frontier is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Solar Technologies and Frontier Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Lithium and Aurora Solar 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 Aurora Solar Technologies are associated (or correlated) with Frontier Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Lithium has no effect on the direction of Aurora Solar i.e., Aurora Solar and Frontier Lithium go up and down completely randomly.

Pair Corralation between Aurora Solar and Frontier Lithium

Assuming the 90 days horizon Aurora Solar Technologies is expected to generate 5.22 times more return on investment than Frontier Lithium. However, Aurora Solar is 5.22 times more volatile than Frontier Lithium. It trades about 0.08 of its potential returns per unit of risk. Frontier Lithium is currently generating about 0.22 per unit of risk. If you would invest  1.10  in Aurora Solar Technologies on July 28, 2025 and sell it today you would lose (0.10) from holding Aurora Solar Technologies or give up 9.09% of portfolio value over 90 days.

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

Aurora Solar Technologies  vs.  Frontier Lithium

Aurora Solar Technologies

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Solar Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aurora Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Frontier Lithium

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Lithium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Frontier Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Solar and Frontier Lithium

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

The idea behind Aurora Solar Technologies and Frontier Lithium 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.