Correlation Between Aeon Metals and Autosports
Can any of the company-specific risk be diversified away by investing in both Aeon Metals and Autosports 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 Aeon Metals and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeon Metals and Autosports Group, you can compare the effects of market volatilities on Aeon Metals and Autosports 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 Aeon Metals with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeon Metals and Autosports.
Diversification Opportunities for Aeon Metals and Autosports
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aeon and Autosports is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Metals and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Aeon 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 Aeon Metals are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Aeon Metals i.e., Aeon Metals and Autosports go up and down completely randomly.
Pair Corralation between Aeon Metals and Autosports
Assuming the 90 days trading horizon Aeon Metals is expected to generate 4.41 times more return on investment than Autosports. However, Aeon Metals is 4.41 times more volatile than Autosports Group. It trades about 0.01 of its potential returns per unit of risk. Autosports Group is currently generating about -0.05 per unit of risk. If you would invest 0.80 in Aeon Metals on November 5, 2024 and sell it today you would lose (0.30) from holding Aeon Metals or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeon Metals vs. Autosports Group
Performance |
| Timeline |
| Aeon Metals |
| Autosports Group |
Aeon Metals and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeon Metals and Autosports
The main advantage of trading using opposite Aeon Metals and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Metals position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Aeon Metals vs. Northern Star Resources | Aeon Metals vs. Evolution Mining | Aeon Metals vs. Bluescope Steel | Aeon Metals vs. De Grey Mining |
| Autosports vs. Treasury Wine Estates | Autosports vs. Dalaroo Metals | Autosports vs. Hutchison Telecommunications | Autosports vs. Cosmo Metals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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