Correlation Between Air New and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Aurelia Metals, you can compare the effects of market volatilities on Air New 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 Air New with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Aurelia Metals.
Diversification Opportunities for Air New and Aurelia Metals
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Aurelia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and Air New 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 Air New Zealand 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 Air New i.e., Air New and Aurelia Metals go up and down completely randomly.
Pair Corralation between Air New and Aurelia Metals
Assuming the 90 days trading horizon Air New is expected to generate 1.64 times less return on investment than Aurelia Metals. But when comparing it to its historical volatility, Air New Zealand is 3.69 times less risky than Aurelia Metals. It trades about 0.05 of its potential returns per unit of risk. Aurelia Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Aurelia Metals on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Aurelia Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Aurelia Metals
Performance |
| Timeline |
| Air New Zealand |
| Aurelia Metals |
Air New and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Aurelia Metals
The main advantage of trading using opposite Air New and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. Aneka Tambang Tbk | Air New vs. ANZ Group Holdings | Air New vs. Australia and New | Air New vs. Commonwealth Bank |
| Aurelia Metals vs. Northern Star Resources | Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. Sandfire Resources NL |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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