Correlation Between Aurelia Metals and Erdene Resource
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Erdene Resource 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 Erdene Resource 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 Erdene Resource Development, you can compare the effects of market volatilities on Aurelia Metals and Erdene Resource 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 Erdene Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Erdene Resource.
Diversification Opportunities for Aurelia Metals and Erdene Resource
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurelia and Erdene is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Erdene Resource Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erdene Resource Deve 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 Erdene Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erdene Resource Deve has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Erdene Resource go up and down completely randomly.
Pair Corralation between Aurelia Metals and Erdene Resource
Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 3.76 times more return on investment than Erdene Resource. However, Aurelia Metals is 3.76 times more volatile than Erdene Resource Development. It trades about 0.22 of its potential returns per unit of risk. Erdene Resource Development is currently generating about 0.02 per unit of risk. If you would invest 7.04 in Aurelia Metals Limited on October 15, 2024 and sell it today you would earn a total of 4.96 from holding Aurelia Metals Limited or generate 70.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Aurelia Metals Limited vs. Erdene Resource Development
Performance |
| Timeline |
| Aurelia Metals |
| Erdene Resource Deve |
Aurelia Metals and Erdene Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and Erdene Resource
The main advantage of trading using opposite Aurelia Metals and Erdene Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Erdene Resource 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 Erdene Resource will offset losses from the drop in Erdene Resource's 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 |
| Erdene Resource vs. Norra Metals Corp | Erdene Resource vs. E79 Resources Corp | Erdene Resource vs. Voltage Metals Corp | Erdene Resource vs. Cantex Mine Development |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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