Correlation Between Aurania Resources and Galway Metals
Can any of the company-specific risk be diversified away by investing in both Aurania Resources and Galway 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 Aurania Resources and Galway Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurania Resources and Galway Metals, you can compare the effects of market volatilities on Aurania Resources and Galway 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 Aurania Resources with a short position of Galway Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurania Resources and Galway Metals.
Diversification Opportunities for Aurania Resources and Galway Metals
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aurania and Galway is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aurania Resources and Galway Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galway Metals and Aurania Resources 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 Aurania Resources are associated (or correlated) with Galway Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galway Metals has no effect on the direction of Aurania Resources i.e., Aurania Resources and Galway Metals go up and down completely randomly.
Pair Corralation between Aurania Resources and Galway Metals
Assuming the 90 days horizon Aurania Resources is expected to generate 1.11 times more return on investment than Galway Metals. However, Aurania Resources is 1.11 times more volatile than Galway Metals. It trades about 0.04 of its potential returns per unit of risk. Galway Metals is currently generating about 0.05 per unit of risk. If you would invest 38.00 in Aurania Resources on August 26, 2024 and sell it today you would earn a total of 11.00 from holding Aurania Resources or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurania Resources vs. Galway Metals
Performance |
| Timeline |
| Aurania Resources |
| Galway Metals |
Aurania Resources and Galway Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurania Resources and Galway Metals
The main advantage of trading using opposite Aurania Resources and Galway Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurania Resources position performs unexpectedly, Galway 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 Galway Metals will offset losses from the drop in Galway Metals' long position.| Aurania Resources vs. Data Communications Management | Aurania Resources vs. Wilmington Capital Management | Aurania Resources vs. Element Fleet Management | Aurania Resources vs. Osisko Metals |
| Galway Metals vs. Cartier Resources | Galway Metals vs. Tristar Gold | Galway Metals vs. Maritime Resources Corp | Galway Metals vs. Banyan Gold Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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