Correlation Between Aeorema Communications and GoldMining
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and GoldMining 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 Aeorema Communications and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and GoldMining, you can compare the effects of market volatilities on Aeorema Communications and GoldMining 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 Aeorema Communications with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and GoldMining.
Diversification Opportunities for Aeorema Communications and GoldMining
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aeorema and GoldMining is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and GoldMining go up and down completely randomly.
Pair Corralation between Aeorema Communications and GoldMining
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 1.41 times less risky than GoldMining. The stock trades about -0.09 of its potential returns per unit of risk. The GoldMining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 115.00 in GoldMining on November 9, 2024 and sell it today you would earn a total of 3.00 from holding GoldMining or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 50.92% |
| Values | Daily Returns |
Aeorema Communications Plc vs. GoldMining
Performance |
| Timeline |
| Aeorema Communications |
| GoldMining |
Aeorema Communications and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and GoldMining
The main advantage of trading using opposite Aeorema Communications and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Aeorema Communications vs. Hochschild Mining plc | Aeorema Communications vs. Take Two Interactive Software | Aeorema Communications vs. Atresmedia | Aeorema Communications vs. DXC Technology Co |
| GoldMining vs. Target Healthcare REIT | GoldMining vs. Porvair plc | GoldMining vs. Sealed Air Corp | GoldMining vs. PureTech Health plc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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