Correlation Between Audius and MONA

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

By analyzing existing cross correlation between Audius and MONA, you can compare the effects of market volatilities on Audius and MONA 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 MONA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Audius and MONA.

Diversification Opportunities for Audius and MONA

0.86

Correlation Coefficient

Audius  MONA

Very poor diversification

The 3 months correlation between Audius and MONA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Audius and MONA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONA 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 MONA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONA has no effect on the direction of Audius i.e., Audius and MONA go up and down completely randomly.

Pair Corralation between Audius and MONA

Assuming the 90 days trading horizon Audius is expected to under-perform the MONA. In addition to that, Audius is 2.05 times more volatile than MONA. It trades about -0.26 of its total potential returns per unit of risk. MONA is currently generating about -0.19 per unit of volatility. If you would invest  39.00  in MONA on February 7, 2024 and sell it today you would lose (5.00) from holding MONA or give up 12.82% of portfolio value over 90 days.

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

Audius  vs.  MONA

Audius

Risk-Adjusted Performance

1 of 100

Weak

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

MONA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MONA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MONA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Audius and MONA

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

The idea behind Audius and MONA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.