Correlation Between ARN Media and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both ARN Media and Aurelia Metals 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 ARN Media and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and Aurelia Metals, you can compare the effects of market volatilities on ARN Media and Aurelia Metals 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 ARN Media with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Aurelia Metals.
Diversification Opportunities for ARN Media and Aurelia Metals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARN and Aurelia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and ARN Media 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 ARN Media Limited are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of ARN Media i.e., ARN Media and Aurelia Metals go up and down completely randomly.
Pair Corralation between ARN Media and Aurelia Metals
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Aurelia Metals. But the stock apears to be less risky and, when comparing its historical volatility, ARN Media Limited is 2.47 times less risky than Aurelia Metals. The stock trades about -0.21 of its potential returns per unit of risk. The Aurelia Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Aurelia Metals on November 4, 2024 and sell it today you would earn a total of 1.00 from holding Aurelia Metals or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Aurelia Metals
Performance |
| Timeline |
| ARN Media Limited |
| Aurelia Metals |
ARN Media and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Aurelia Metals
The main advantage of trading using opposite ARN Media and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Aurelia Metals 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| ARN Media vs. Sky Metals | ARN Media vs. Aeon Metals | ARN Media vs. Black Rock Mining | ARN Media vs. Hudson Investment Group |
| Aurelia Metals vs. Credit Clear | Aurelia Metals vs. Regal Funds Management | Aurelia Metals vs. Insignia Financial | Aurelia Metals vs. Black Rock Mining |
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 the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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