Correlation Between AUREA SA and Lyxor 1

Can any of the company-specific risk be diversified away by investing in both AUREA SA and Lyxor 1 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 AUREA SA and Lyxor 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AUREA SA INH and Lyxor 1 , you can compare the effects of market volatilities on AUREA SA and Lyxor 1 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 AUREA SA with a short position of Lyxor 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUREA SA and Lyxor 1.

Diversification Opportunities for AUREA SA and Lyxor 1

0.73

Correlation Coefficient

AUREA SA  Lyxor 1

Poor diversification

The 3 months correlation between AUREA and Lyxor is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding AUREA SA INH and Lyxor 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor 1 and AUREA SA 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 AUREA SA INH are associated (or correlated) with Lyxor 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor 1 has no effect on the direction of AUREA SA i.e., AUREA SA and Lyxor 1 go up and down completely randomly.

Pair Corralation between AUREA SA and Lyxor 1

Assuming the 90 days horizon AUREA SA is expected to generate 1.08 times less return on investment than Lyxor 1. In addition to that, AUREA SA is 1.9 times more volatile than Lyxor 1 . It trades about 0.11 of its total potential returns per unit of risk. Lyxor 1 is currently generating about 0.23 per unit of volatility. If you would invest  2,490  in Lyxor 1 on April 20, 2025 and sell it today you would earn a total of  361.00  from holding Lyxor 1 or generate 14.5% return on investment over 90 days.

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

AUREA SA INH  vs.  Lyxor 1

AUREA SA INH

Risk-Adjusted Performance

OK

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

Lyxor 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lyxor 1 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUREA SA and Lyxor 1

The main advantage of trading using opposite AUREA SA and Lyxor 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUREA SA position performs unexpectedly, Lyxor 1 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 Lyxor 1 will offset losses from the drop in Lyxor 1's long position.

The idea behind AUREA SA INH and Lyxor 1 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.