Correlation Between Scottish American and Aurora Investment

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

By analyzing existing cross correlation between Scottish American Investment and Aurora Investment Trust, you can compare the effects of market volatilities on Scottish American and Aurora Investment 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 Scottish American with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish American and Aurora Investment.

Diversification Opportunities for Scottish American and Aurora Investment

0.72

Correlation Coefficient

Scottish American  Aurora Investment

Poor diversification

The 3 months correlation between Scottish and Aurora is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Scottish American Investment and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust and Scottish American 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 Scottish American Investment are associated (or correlated) with Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of Scottish American i.e., Scottish American and Aurora Investment go up and down completely randomly.

Pair Corralation between Scottish American and Aurora Investment

Assuming the 90 days trading horizon Scottish American Investment is expected to generate 0.64 times more return on investment than Aurora Investment. However, Scottish American Investment is 1.56 times less risky than Aurora Investment. It trades about 0.2 of its potential returns per unit of risk. Aurora Investment Trust is currently generating about 0.1 per unit of risk. If you would invest  48,059  in Scottish American Investment on April 20, 2025 and sell it today you would earn a total of  3,841  from holding Scottish American Investment or generate 7.99% return on investment over 90 days.

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

Scottish American Investment  vs.  Aurora Investment Trust

Scottish American

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish American Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Scottish American may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Aurora Investment Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Aurora Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Scottish American and Aurora Investment

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

The idea behind Scottish American Investment and Aurora Investment Trust 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.