Correlation Between Austral Gold and Valeura Energy
Can any of the company-specific risk be diversified away by investing in both Austral Gold and Valeura Energy 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 Austral Gold and Valeura Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austral Gold Limited and Valeura Energy, you can compare the effects of market volatilities on Austral Gold and Valeura Energy 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 Austral Gold with a short position of Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austral Gold and Valeura Energy.
Diversification Opportunities for Austral Gold and Valeura Energy
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Austral and Valeura is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold Limited and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy and Austral Gold 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 Austral Gold Limited are associated (or correlated) with Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Austral Gold i.e., Austral Gold and Valeura Energy go up and down completely randomly.
Pair Corralation between Austral Gold and Valeura Energy
Assuming the 90 days horizon Austral Gold Limited is expected to generate 7.49 times more return on investment than Valeura Energy. However, Austral Gold is 7.49 times more volatile than Valeura Energy. It trades about 0.09 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.26 per unit of risk. If you would invest 2.06 in Austral Gold Limited on September 28, 2024 and sell it today you would lose (0.10) from holding Austral Gold Limited or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Austral Gold Limited vs. Valeura Energy
Performance |
| Timeline |
| Austral Gold Limited |
| Valeura Energy |
Austral Gold and Valeura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austral Gold and Valeura Energy
The main advantage of trading using opposite Austral Gold and Valeura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austral Gold position performs unexpectedly, Valeura Energy 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 Valeura Energy will offset losses from the drop in Valeura Energy's long position.| Austral Gold vs. Compania de Minas | Austral Gold vs. Triple Flag Precious | Austral Gold vs. Zimplats Holdings Limited |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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