Correlation Between Aurelia Metals and ARN Media
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and ARN Media 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 Aurelia Metals and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals and ARN Media Limited, you can compare the effects of market volatilities on Aurelia Metals and ARN Media 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 Aurelia Metals with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and ARN Media.
Diversification Opportunities for Aurelia Metals and ARN Media
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aurelia and ARN is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Aurelia 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 Aurelia Metals are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and ARN Media go up and down completely randomly.
Pair Corralation between Aurelia Metals and ARN Media
Assuming the 90 days trading horizon Aurelia Metals is expected to generate 1.85 times more return on investment than ARN Media. However, Aurelia Metals is 1.85 times more volatile than ARN Media Limited. It trades about 0.04 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.01 per unit of risk. If you would invest 12.00 in Aurelia Metals on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Aurelia Metals or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurelia Metals vs. ARN Media Limited
Performance |
| Timeline |
| Aurelia Metals |
| ARN Media Limited |
Aurelia Metals and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and ARN Media
The main advantage of trading using opposite Aurelia Metals and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Aurelia Metals vs. Northern Star Resources | Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. Sandfire Resources NL |
| ARN Media vs. Aneka Tambang Tbk | ARN Media vs. BHP Group Limited | ARN Media vs. Commonwealth Bank of | ARN Media vs. Commonwealth Bank of |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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