Correlation Between Aurelia Metals and Arafura Resources
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Arafura Resources 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 Aurelia Metals and Arafura Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals Limited and Arafura Resources, you can compare the effects of market volatilities on Aurelia Metals and Arafura Resources 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 Aurelia Metals with a short position of Arafura Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Arafura Resources.
Diversification Opportunities for Aurelia Metals and Arafura Resources
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aurelia and Arafura is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Arafura Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arafura Resources and Aurelia Metals 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 Aurelia Metals Limited are associated (or correlated) with Arafura Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arafura Resources has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Arafura Resources go up and down completely randomly.
Pair Corralation between Aurelia Metals and Arafura Resources
If you would invest 15.00 in Aurelia Metals Limited on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Aurelia Metals Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aurelia Metals Limited vs. Arafura Resources
Performance |
| Timeline |
| Aurelia Metals |
| Arafura Resources |
Aurelia Metals and Arafura Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and Arafura Resources
The main advantage of trading using opposite Aurelia Metals and Arafura Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Arafura Resources 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 Arafura Resources will offset losses from the drop in Arafura Resources' long position.| Aurelia Metals vs. Champion Bear Resources | Aurelia Metals vs. Baroyeca Gold Silver | Aurelia Metals vs. Centaurus Metals Limited | Aurelia Metals vs. Edison Cobalt Corp |
| Arafura Resources vs. Texas Rare Earth | Arafura Resources vs. Lynas Rare Earths | Arafura Resources vs. Ucore Rare Metals | Arafura Resources vs. Aurelia Metals Limited |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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