Correlation Between Aurelia Metals and DY6 Metals
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and DY6 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 Aurelia Metals and DY6 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals and DY6 Metals, you can compare the effects of market volatilities on Aurelia Metals and DY6 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 Aurelia Metals with a short position of DY6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and DY6 Metals.
Diversification Opportunities for Aurelia Metals and DY6 Metals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurelia and DY6 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and DY6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DY6 Metals 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 DY6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DY6 Metals has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and DY6 Metals go up and down completely randomly.
Pair Corralation between Aurelia Metals and DY6 Metals
Assuming the 90 days trading horizon Aurelia Metals is expected to generate 2.4 times less return on investment than DY6 Metals. But when comparing it to its historical volatility, Aurelia Metals is 4.92 times less risky than DY6 Metals. It trades about 0.07 of its potential returns per unit of risk. DY6 Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9.50 in DY6 Metals on August 24, 2024 and sell it today you would lose (4.50) from holding DY6 Metals or give up 47.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurelia Metals vs. DY6 Metals
Performance |
| Timeline |
| Aurelia Metals |
| DY6 Metals |
Aurelia Metals and DY6 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and DY6 Metals
The main advantage of trading using opposite Aurelia Metals and DY6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, DY6 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 DY6 Metals will offset losses from the drop in DY6 Metals' long position.| Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. Perseus Mining | Aurelia Metals vs. Champion Iron |
| DY6 Metals vs. Evolution Mining | DY6 Metals vs. Bluescope Steel | DY6 Metals vs. Perseus Mining | DY6 Metals vs. Champion Iron |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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