Correlation Between Aeorema Communications and Seraphim Space

Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Seraphim Space 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 Aeorema Communications and Seraphim Space into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aeorema Communications Plc and Seraphim Space Investment, you can compare the effects of market volatilities on Aeorema Communications and Seraphim Space 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 Aeorema Communications with a short position of Seraphim Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Seraphim Space.

Diversification Opportunities for Aeorema Communications and Seraphim Space

0.62

Correlation Coefficient

Aeorema Communications  Seraphim Space

Poor diversification

The 3 months correlation between Aeorema and Seraphim is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Seraphim Space Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seraphim Space Investment and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with Seraphim Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seraphim Space Investment has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Seraphim Space go up and down completely randomly.

Pair Corralation between Aeorema Communications and Seraphim Space

Assuming the 90 days trading horizon Aeorema Communications is expected to generate 2.01 times less return on investment than Seraphim Space. But when comparing it to its historical volatility, Aeorema Communications Plc is 1.13 times less risky than Seraphim Space. It trades about 0.16 of its potential returns per unit of risk. Seraphim Space Investment is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  5,220  in Seraphim Space Investment on April 23, 2025 and sell it today you would earn a total of  3,280  from holding Seraphim Space Investment or generate 62.84% return on investment over 90 days.

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

Aeorema Communications Plc  vs.  Seraphim Space Investment

Aeorema Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeorema Communications Plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Aeorema Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Seraphim Space Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seraphim Space Investment are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Seraphim Space unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aeorema Communications and Seraphim Space

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

The idea behind Aeorema Communications Plc and Seraphim Space Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.