Correlation Between Aurum Resources and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both Aurum Resources and TPG Telecom 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 TPG Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurum Resources and TPG Telecom, you can compare the effects of market volatilities on Aurum Resources and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurum Resources and TPG Telecom.
Diversification Opportunities for Aurum Resources and TPG Telecom
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aurum and TPG is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aurum Resources and TPG Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom has no effect on the direction of Aurum Resources i.e., Aurum Resources and TPG Telecom go up and down completely randomly.
Pair Corralation between Aurum Resources and TPG Telecom
Assuming the 90 days trading horizon Aurum Resources is expected to generate 3.85 times more return on investment than TPG Telecom. However, Aurum Resources is 3.85 times more volatile than TPG Telecom. It trades about 0.05 of its potential returns per unit of risk. TPG Telecom is currently generating about -0.13 per unit of risk. If you would invest 36.00 in Aurum Resources on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Aurum Resources or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurum Resources vs. TPG Telecom
Performance |
| Timeline |
| Aurum Resources |
| TPG Telecom |
Aurum Resources and TPG Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurum Resources and TPG Telecom
The main advantage of trading using opposite Aurum Resources and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurum Resources position performs unexpectedly, TPG Telecom 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 TPG Telecom will offset losses from the drop in TPG Telecom's long position.| Aurum Resources vs. Premier Investments | Aurum Resources vs. Diversified United Investment | Aurum Resources vs. Auctus Alternative Investments | Aurum Resources vs. ARN Media Limited |
| TPG Telecom vs. Ainsworth Game Technology | TPG Telecom vs. Kkr Credit Income | TPG Telecom vs. National Australia Bank | TPG Telecom vs. Toys R Us |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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