Correlation Between ACDC Metals and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both ACDC Metals 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 ACDC Metals and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACDC Metals and Aurelia Metals, you can compare the effects of market volatilities on ACDC Metals 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 ACDC Metals with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Aurelia Metals.
Diversification Opportunities for ACDC Metals and Aurelia Metals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACDC and Aurelia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and ACDC Metals 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 ACDC Metals 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 ACDC Metals i.e., ACDC Metals and Aurelia Metals go up and down completely randomly.
Pair Corralation between ACDC Metals and Aurelia Metals
Assuming the 90 days trading horizon ACDC Metals is expected to under-perform the Aurelia Metals. But the stock apears to be less risky and, when comparing its historical volatility, ACDC Metals is 1.07 times less risky than Aurelia Metals. The stock trades about -0.01 of its potential returns per unit of risk. The Aurelia Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Aurelia Metals on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Aurelia Metals or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACDC Metals vs. Aurelia Metals
Performance |
| Timeline |
| ACDC Metals |
| Aurelia Metals |
ACDC Metals and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACDC Metals and Aurelia Metals
The main advantage of trading using opposite ACDC Metals and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals 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.| ACDC Metals vs. Northern Star Resources | ACDC Metals vs. Evolution Mining | ACDC Metals vs. Bluescope Steel | ACDC Metals vs. De Grey Mining |
| Aurelia Metals vs. Alto Metals | Aurelia Metals vs. Prime Financial Group | Aurelia Metals vs. Australian Unity Office | Aurelia Metals vs. Pioneer Credit |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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