Correlation Between ARN Media and Aurum Resources
Can any of the company-specific risk be diversified away by investing in both ARN Media and Aurum Resources 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 Aurum Resources 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 Aurum Resources, you can compare the effects of market volatilities on ARN Media and Aurum Resources 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 Aurum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Aurum Resources.
Diversification Opportunities for ARN Media and Aurum Resources
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARN and Aurum is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Aurum Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurum Resources 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 Aurum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurum Resources has no effect on the direction of ARN Media i.e., ARN Media and Aurum Resources go up and down completely randomly.
Pair Corralation between ARN Media and Aurum Resources
Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Aurum Resources. But the stock apears to be less risky and, when comparing its historical volatility, ARN Media Limited is 1.82 times less risky than Aurum Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Aurum Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Aurum Resources on August 26, 2024 and sell it today you would earn a total of 25.00 from holding Aurum Resources or generate 147.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARN Media Limited vs. Aurum Resources
Performance |
| Timeline |
| ARN Media Limited |
| Aurum Resources |
ARN Media and Aurum Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Aurum Resources
The main advantage of trading using opposite ARN Media and Aurum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Aurum Resources 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 Aurum Resources will offset losses from the drop in Aurum Resources' long position.| ARN Media vs. Gtn | ARN Media vs. Dynamic Drill And | ARN Media vs. Insignia Financial | ARN Media vs. G8 Education |
| Aurum Resources vs. ARN Media Limited | Aurum Resources vs. Pioneer Credit | Aurum Resources vs. BSP Financial Group | Aurum Resources vs. Skycity Entertainment Group |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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