Correlation Between Aurelia Metals and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Australian Agricultural 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 Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals and Australian Agricultural, you can compare the effects of market volatilities on Aurelia Metals and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Australian Agricultural.
Diversification Opportunities for Aurelia Metals and Australian Agricultural
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aurelia and Australian is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Australian Agricultural go up and down completely randomly.
Pair Corralation between Aurelia Metals and Australian Agricultural
Assuming the 90 days trading horizon Aurelia Metals is expected to generate 4.2 times more return on investment than Australian Agricultural. However, Aurelia Metals is 4.2 times more volatile than Australian Agricultural. It trades about 0.14 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.06 per unit of risk. If you would invest 17.00 in Aurelia Metals on November 1, 2024 and sell it today you would earn a total of 2.00 from holding Aurelia Metals or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurelia Metals vs. Australian Agricultural
Performance |
| Timeline |
| Aurelia Metals |
| Australian Agricultural |
Aurelia Metals and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and Australian Agricultural
The main advantage of trading using opposite Aurelia Metals and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Aurelia Metals vs. Northern Star Resources | Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. De Grey Mining |
| Australian Agricultural vs. Dug Technology | Australian Agricultural vs. Credit Clear | Australian Agricultural vs. Ainsworth Game Technology | Australian Agricultural vs. Medibank Private |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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