Correlation Between Aurelia Metals and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Lynas Rare 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 Lynas Rare 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 Lynas Rare Earths, you can compare the effects of market volatilities on Aurelia Metals and Lynas Rare 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 Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Lynas Rare.
Diversification Opportunities for Aurelia Metals and Lynas Rare
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aurelia and Lynas is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths 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 Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Lynas Rare go up and down completely randomly.
Pair Corralation between Aurelia Metals and Lynas Rare
Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 3.79 times more return on investment than Lynas Rare. However, Aurelia Metals is 3.79 times more volatile than Lynas Rare Earths. It trades about 0.05 of its potential returns per unit of risk. Lynas Rare Earths is currently generating about -0.01 per unit of risk. If you would invest 9.95 in Aurelia Metals Limited on September 3, 2024 and sell it today you would earn a total of 5.05 from holding Aurelia Metals Limited or generate 50.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Aurelia Metals Limited vs. Lynas Rare Earths
Performance |
| Timeline |
| Aurelia Metals |
| Lynas Rare Earths |
Aurelia Metals and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and Lynas Rare
The main advantage of trading using opposite Aurelia Metals and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare's long position.| Aurelia Metals vs. Qubec Nickel Corp | Aurelia Metals vs. IGO Limited | Aurelia Metals vs. Avarone Metals | Aurelia Metals vs. Adriatic Metals PLC |
| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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