Correlation Between Aurelia Metals and Austco Healthcare
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Austco Healthcare 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 Austco Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals and Austco Healthcare, you can compare the effects of market volatilities on Aurelia Metals and Austco Healthcare 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 Austco Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Austco Healthcare.
Diversification Opportunities for Aurelia Metals and Austco Healthcare
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurelia and Austco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare 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 Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Austco Healthcare go up and down completely randomly.
Pair Corralation between Aurelia Metals and Austco Healthcare
Assuming the 90 days trading horizon Aurelia Metals is expected to generate 1.52 times more return on investment than Austco Healthcare. However, Aurelia Metals is 1.52 times more volatile than Austco Healthcare. It trades about 0.05 of its potential returns per unit of risk. Austco Healthcare is currently generating about 0.01 per unit of risk. If you would invest 17.00 in Aurelia Metals on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Aurelia Metals or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurelia Metals vs. Austco Healthcare
Performance |
| Timeline |
| Aurelia Metals |
| Austco Healthcare |
Aurelia Metals and Austco Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and Austco Healthcare
The main advantage of trading using opposite Aurelia Metals and Austco Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Austco Healthcare 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 Austco Healthcare will offset losses from the drop in Austco Healthcare's long position.| Aurelia Metals vs. Aristocrat Leisure | Aurelia Metals vs. Genetic Technologies | Aurelia Metals vs. Thorney Technologies | Aurelia Metals vs. Ras Technology Holdings |
| Austco Healthcare vs. FSA Group | Austco Healthcare vs. Tamawood | Austco Healthcare vs. Rea Group | Austco Healthcare vs. CSL |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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