Correlation Between Arctic Star and Aurania Resources
Can any of the company-specific risk be diversified away by investing in both Arctic Star and Aurania Resources 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 Arctic Star and Aurania Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Star Exploration and Aurania Resources, you can compare the effects of market volatilities on Arctic Star and Aurania Resources 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 Arctic Star with a short position of Aurania Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Star and Aurania Resources.
Diversification Opportunities for Arctic Star and Aurania Resources
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arctic and Aurania is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Star Exploration and Aurania Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurania Resources and Arctic Star 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 Arctic Star Exploration are associated (or correlated) with Aurania Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurania Resources has no effect on the direction of Arctic Star i.e., Arctic Star and Aurania Resources go up and down completely randomly.
Pair Corralation between Arctic Star and Aurania Resources
Assuming the 90 days horizon Arctic Star Exploration is expected to under-perform the Aurania Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arctic Star Exploration is 1.21 times less risky than Aurania Resources. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Aurania Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Aurania Resources on August 25, 2024 and sell it today you would earn a total of 13.00 from holding Aurania Resources or generate 61.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Star Exploration vs. Aurania Resources
Performance |
| Timeline |
| Arctic Star Exploration |
| Aurania Resources |
Arctic Star and Aurania Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Star and Aurania Resources
The main advantage of trading using opposite Arctic Star and Aurania Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Star position performs unexpectedly, Aurania Resources 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 Aurania Resources will offset losses from the drop in Aurania Resources' long position.| Arctic Star vs. Morningstar Unconstrained Allocation | Arctic Star vs. High Yield Municipal Fund | Arctic Star vs. Knife River | Arctic Star vs. Klckner Co SE |
| Aurania Resources vs. Morningstar Unconstrained Allocation | Aurania Resources vs. High Yield Municipal Fund | Aurania Resources vs. Knife River | Aurania Resources vs. Klckner Co SE |
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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