Correlation Between Aurania Resources and Capella Minerals
Can any of the company-specific risk be diversified away by investing in both Aurania Resources and Capella Minerals 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 Aurania Resources and Capella Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurania Resources and Capella Minerals Limited, you can compare the effects of market volatilities on Aurania Resources and Capella Minerals 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 Aurania Resources with a short position of Capella Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurania Resources and Capella Minerals.
Diversification Opportunities for Aurania Resources and Capella Minerals
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aurania and Capella is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aurania Resources and Capella Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capella Minerals and Aurania 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 Aurania Resources are associated (or correlated) with Capella Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capella Minerals has no effect on the direction of Aurania Resources i.e., Aurania Resources and Capella Minerals go up and down completely randomly.
Pair Corralation between Aurania Resources and Capella Minerals
Assuming the 90 days horizon Aurania Resources is expected to under-perform the Capella Minerals. In addition to that, Aurania Resources is 2.0 times more volatile than Capella Minerals Limited. It trades about -0.22 of its total potential returns per unit of risk. Capella Minerals Limited is currently generating about -0.09 per unit of volatility. If you would invest 0.74 in Capella Minerals Limited on August 29, 2024 and sell it today you would lose (0.05) from holding Capella Minerals Limited or give up 6.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aurania Resources vs. Capella Minerals Limited
Performance |
| Timeline |
| Aurania Resources |
| Capella Minerals |
Aurania Resources and Capella Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurania Resources and Capella Minerals
The main advantage of trading using opposite Aurania Resources and Capella Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurania Resources position performs unexpectedly, Capella Minerals 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 Capella Minerals will offset losses from the drop in Capella Minerals' long position.| Aurania Resources vs. Mirasol Resources | Aurania Resources vs. Clean Air Metals | Aurania Resources vs. Equity Metals |
| Capella Minerals vs. Mirasol Resources | Capella Minerals vs. Clean Air Metals | Capella Minerals vs. Equity Metals |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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