Correlation Between Auction and AERGO

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

Diversification Opportunities for Auction and AERGO

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Auction and AERGO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Auction and AERGO in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on AERGO and Auction 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 Auction are associated (or correlated) with AERGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AERGO has no effect on the direction of Auction i.e., Auction and AERGO go up and down completely randomly.

Pair Corralation between Auction and AERGO

Assuming the 90 days trading horizon Auction is expected to generate 1.69 times more return on investment than AERGO. However, Auction is 1.69 times more volatile than AERGO. It trades about -0.06 of its potential returns per unit of risk. AERGO is currently generating about -0.1 per unit of risk. If you would invest  1,363  in Auction on February 15, 2022 and sell it today you would lose (566.00)  from holding Auction or give up 41.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy90.7%
ValuesDaily Returns

Auction  vs.  AERGO

 Performance (%) 
      Timeline 
Auction 
Auction Performance
0 of 100
Over the last 90 days Auction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's forward indicators remain quite persistent which may send shares a bit higher in June 2022. The latest mess may also be a sign of long-standing up-swing for Auction institutional investors.

Auction Price Channel

AERGO 
AERGO Performance
0 of 100
Over the last 90 days AERGO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AERGO investors.

AERGO Price Channel

Auction and AERGO Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Auction and AERGO

The main advantage of trading using opposite Auction and AERGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction position performs unexpectedly, AERGO 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 AERGO will offset losses from the drop in AERGO's long position.
The idea behind Auction and AERGO 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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