Correlation Between Audius and Serum

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Can any of the company-specific risk be diversified away by investing in both Audius and Serum 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 Audius and Serum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Audius and Serum, you can compare the effects of market volatilities on Audius and Serum 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 Audius with a short position of Serum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Audius and Serum.

Diversification Opportunities for Audius and Serum

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Audius and Serum is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Audius and Serum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serum and Audius 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 Audius are associated (or correlated) with Serum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serum has no effect on the direction of Audius i.e., Audius and Serum go up and down completely randomly.

Pair Corralation between Audius and Serum

Assuming the 90 days trading horizon Audius is expected to generate 2.47 times less return on investment than Serum. But when comparing it to its historical volatility, Audius is 1.45 times less risky than Serum. It trades about 0.1 of its potential returns per unit of risk. Serum is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5.40  in Serum on December 29, 2023 and sell it today you would earn a total of  1.70  from holding Serum or generate 31.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Audius  vs.  Serum

 Performance 
       Timeline  
Audius 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Audius are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Audius exhibited solid returns over the last few months and may actually be approaching a breakup point.
Serum 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Serum are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Serum may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Audius and Serum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Audius and Serum

The main advantage of trading using opposite Audius and Serum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Audius position performs unexpectedly, Serum 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 Serum will offset losses from the drop in Serum's long position.
The idea behind Audius and Serum 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.
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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