Correlation Between Aurum Resources and ARN Media
Can any of the company-specific risk be diversified away by investing in both Aurum Resources and ARN Media 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 Aurum Resources and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurum Resources and ARN Media Limited, you can compare the effects of market volatilities on Aurum Resources and ARN Media 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 Aurum Resources with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurum Resources and ARN Media.
Diversification Opportunities for Aurum Resources and ARN Media
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurum and ARN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aurum Resources and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Aurum 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 Aurum Resources are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Aurum Resources i.e., Aurum Resources and ARN Media go up and down completely randomly.
Pair Corralation between Aurum Resources and ARN Media
Assuming the 90 days trading horizon Aurum Resources is expected to generate 1.8 times more return on investment than ARN Media. However, Aurum Resources is 1.8 times more volatile than ARN Media Limited. It trades about 0.11 of its potential returns per unit of risk. ARN Media Limited is currently generating about 0.01 per unit of risk. If you would invest 10.00 in Aurum Resources on August 29, 2024 and sell it today you would earn a total of 29.00 from holding Aurum Resources or generate 290.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurum Resources vs. ARN Media Limited
Performance |
| Timeline |
| Aurum Resources |
| ARN Media Limited |
Aurum Resources and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurum Resources and ARN Media
The main advantage of trading using opposite Aurum Resources and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurum Resources position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Aurum Resources vs. Apiam Animal Health | Aurum Resources vs. Oceania Healthcare | Aurum Resources vs. AiMedia Technologies | Aurum Resources vs. Hutchison Telecommunications |
| ARN Media vs. G8 Education | ARN Media vs. Embark Education Group | ARN Media vs. Aurelia Metals | ARN Media vs. Perseus Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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