Correlation Between Aura Energy and Radio Fuels
Can any of the company-specific risk be diversified away by investing in both Aura Energy and Radio Fuels 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 Aura Energy and Radio Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura Energy Limited and Radio Fuels Energy, you can compare the effects of market volatilities on Aura Energy and Radio Fuels 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 Aura Energy with a short position of Radio Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Energy and Radio Fuels.
Diversification Opportunities for Aura Energy and Radio Fuels
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aura and Radio is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aura Energy Limited and Radio Fuels Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radio Fuels Energy and Aura Energy 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 Aura Energy Limited are associated (or correlated) with Radio Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radio Fuels Energy has no effect on the direction of Aura Energy i.e., Aura Energy and Radio Fuels go up and down completely randomly.
Pair Corralation between Aura Energy and Radio Fuels
Assuming the 90 days horizon Aura Energy Limited is expected to generate 1.73 times more return on investment than Radio Fuels. However, Aura Energy is 1.73 times more volatile than Radio Fuels Energy. It trades about 0.04 of its potential returns per unit of risk. Radio Fuels Energy is currently generating about 0.03 per unit of risk. If you would invest 20.00 in Aura Energy Limited on August 29, 2024 and sell it today you would lose (9.00) from holding Aura Energy Limited or give up 45.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aura Energy Limited vs. Radio Fuels Energy
Performance |
| Timeline |
| Aura Energy Limited |
| Radio Fuels Energy |
Aura Energy and Radio Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aura Energy and Radio Fuels
The main advantage of trading using opposite Aura Energy and Radio Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Energy position performs unexpectedly, Radio Fuels 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 Radio Fuels will offset losses from the drop in Radio Fuels' long position.| Aura Energy vs. Elevate Uranium | Aura Energy vs. Baselode Energy Corp | Aura Energy vs. Peninsula Energy | Aura Energy vs. Forsys Metals Corp |
| Radio Fuels vs. Aura Energy Limited | Radio Fuels vs. ALX Resources Corp | Radio Fuels vs. Azincourt Uranium | Radio Fuels vs. Anfield Resources |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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