Correlation Between ABACUS STORAGE and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both ABACUS STORAGE and Aurelia 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 ABACUS STORAGE and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABACUS STORAGE KING and Aurelia Metals, you can compare the effects of market volatilities on ABACUS STORAGE and Aurelia 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 ABACUS STORAGE with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Aurelia Metals.
Diversification Opportunities for ABACUS STORAGE and Aurelia Metals
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ABACUS and Aurelia is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and ABACUS STORAGE 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 ABACUS STORAGE KING are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Aurelia Metals go up and down completely randomly.
Pair Corralation between ABACUS STORAGE and Aurelia Metals
Assuming the 90 days trading horizon ABACUS STORAGE KING is expected to generate 0.34 times more return on investment than Aurelia Metals. However, ABACUS STORAGE KING is 2.93 times less risky than Aurelia Metals. It trades about -0.3 of its potential returns per unit of risk. Aurelia Metals is currently generating about -0.11 per unit of risk. If you would invest 130.00 in ABACUS STORAGE KING on August 25, 2024 and sell it today you would lose (11.00) from holding ABACUS STORAGE KING or give up 8.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABACUS STORAGE KING vs. Aurelia Metals
Performance |
| Timeline |
| ABACUS STORAGE KING |
| Aurelia Metals |
ABACUS STORAGE and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABACUS STORAGE and Aurelia Metals
The main advantage of trading using opposite ABACUS STORAGE and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABACUS STORAGE position performs unexpectedly, Aurelia 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.The idea behind ABACUS STORAGE KING and Aurelia Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aurelia Metals vs. Northern Star Resources | Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. Sandfire Resources NL |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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