Correlation Between Eastern Platinum and Aura Minerals
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and Aura 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 Eastern Platinum and Aura Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Platinum Limited and Aura Minerals, you can compare the effects of market volatilities on Eastern Platinum and Aura 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 Eastern Platinum with a short position of Aura Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and Aura Minerals.
Diversification Opportunities for Eastern Platinum and Aura Minerals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and Aura is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and Aura Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Minerals and Eastern Platinum 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 Eastern Platinum Limited are associated (or correlated) with Aura Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Minerals has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and Aura Minerals go up and down completely randomly.
Pair Corralation between Eastern Platinum and Aura Minerals
Assuming the 90 days trading horizon Eastern Platinum Limited is expected to under-perform the Aura Minerals. In addition to that, Eastern Platinum is 2.4 times more volatile than Aura Minerals. It trades about -0.06 of its total potential returns per unit of risk. Aura Minerals is currently generating about 0.05 per unit of volatility. If you would invest 1,703 in Aura Minerals on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Aura Minerals or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Platinum Limited vs. Aura Minerals
Performance |
| Timeline |
| Eastern Platinum |
| Aura Minerals |
Eastern Platinum and Aura Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and Aura Minerals
The main advantage of trading using opposite Eastern Platinum and Aura Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, Aura 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 Aura Minerals will offset losses from the drop in Aura Minerals' long position.| Eastern Platinum vs. Platinum Group Metals | Eastern Platinum vs. Centamin PLC | Eastern Platinum vs. Entree Resources | Eastern Platinum vs. Aura Minerals |
| Aura Minerals vs. Centamin PLC | Aura Minerals vs. Entree Resources | Aura Minerals vs. Wesdome Gold Mines | Aura Minerals vs. Eastern Platinum 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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