Correlation Between Aurelia Metals and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Sumitomo Metal 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 Sumitomo Metal 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 Sumitomo Metal Mining, you can compare the effects of market volatilities on Aurelia Metals and Sumitomo Metal 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 Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Sumitomo Metal.
Diversification Opportunities for Aurelia Metals and Sumitomo Metal
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aurelia and Sumitomo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining 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 Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Aurelia Metals and Sumitomo Metal
Assuming the 90 days horizon Aurelia Metals Limited is expected to under-perform the Sumitomo Metal. In addition to that, Aurelia Metals is 1.32 times more volatile than Sumitomo Metal Mining. It trades about -0.21 of its total potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.22 per unit of volatility. If you would invest 697.00 in Sumitomo Metal Mining on August 30, 2024 and sell it today you would lose (89.00) from holding Sumitomo Metal Mining or give up 12.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurelia Metals Limited vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Aurelia Metals |
| Sumitomo Metal Mining |
Aurelia Metals and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and Sumitomo Metal
The main advantage of trading using opposite Aurelia Metals and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Sumitomo Metal 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 Sumitomo Metal will offset losses from the drop in Sumitomo Metal's long position.| Aurelia Metals vs. Rockridge Resources | Aurelia Metals vs. Ameriwest Lithium | Aurelia Metals vs. Osisko Metals Incorporated | Aurelia Metals vs. Volt Lithium Corp |
| Sumitomo Metal vs. Rockridge Resources | Sumitomo Metal vs. Ameriwest Lithium | Sumitomo Metal vs. Osisko Metals Incorporated | Sumitomo Metal vs. Volt Lithium Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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