Correlation Between Aura Investments and Bazan Oil
Can any of the company-specific risk be diversified away by investing in both Aura Investments and Bazan Oil 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 Aura Investments and Bazan Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura Investments and Bazan Oil Refineries, you can compare the effects of market volatilities on Aura Investments and Bazan Oil 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 Aura Investments with a short position of Bazan Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Investments and Bazan Oil.
Diversification Opportunities for Aura Investments and Bazan Oil
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aura and Bazan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aura Investments and Bazan Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bazan Oil Refineries and Aura Investments 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 Aura Investments are associated (or correlated) with Bazan Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bazan Oil Refineries has no effect on the direction of Aura Investments i.e., Aura Investments and Bazan Oil go up and down completely randomly.
Pair Corralation between Aura Investments and Bazan Oil
Assuming the 90 days trading horizon Aura Investments is expected to generate 1.43 times more return on investment than Bazan Oil. However, Aura Investments is 1.43 times more volatile than Bazan Oil Refineries. It trades about 0.19 of its potential returns per unit of risk. Bazan Oil Refineries is currently generating about 0.07 per unit of risk. If you would invest 49,042 in Aura Investments on December 30, 2023 and sell it today you would earn a total of 105,958 from holding Aura Investments or generate 216.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aura Investments vs. Bazan Oil Refineries
Performance |
Timeline |
Aura Investments |
Bazan Oil Refineries |
Aura Investments and Bazan Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aura Investments and Bazan Oil
The main advantage of trading using opposite Aura Investments and Bazan Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Investments position performs unexpectedly, Bazan Oil 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 Bazan Oil will offset losses from the drop in Bazan Oil's long position.Aura Investments vs. Bank Leumi Le Israel | Aura Investments vs. Mizrahi Tefahot | Aura Investments vs. Israel Discount Bank | Aura Investments vs. Migdal Insurance |
Bazan Oil vs. Bank Leumi Le Israel | Bazan Oil vs. Mizrahi Tefahot | Bazan Oil vs. Azrieli Group | Bazan Oil vs. Israel Discount Bank |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
CEOs Directory Screen CEOs from public companies around the world | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |