Correlation Between EROAD and Aumake
Can any of the company-specific risk be diversified away by investing in both EROAD and Aumake 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 EROAD and Aumake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Aumake, you can compare the effects of market volatilities on EROAD and Aumake 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 EROAD with a short position of Aumake. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Aumake.
Diversification Opportunities for EROAD and Aumake
Very weak diversification
The 3 months correlation between EROAD and Aumake is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Aumake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumake and EROAD 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 EROAD are associated (or correlated) with Aumake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumake has no effect on the direction of EROAD i.e., EROAD and Aumake go up and down completely randomly.
Pair Corralation between EROAD and Aumake
Assuming the 90 days trading horizon EROAD is expected to generate 3.66 times less return on investment than Aumake. But when comparing it to its historical volatility, EROAD is 7.21 times less risky than Aumake. It trades about 0.14 of its potential returns per unit of risk. Aumake is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.50 in Aumake on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Aumake or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
EROAD vs. Aumake
Performance |
| Timeline |
| EROAD |
| Aumake |
EROAD and Aumake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Aumake
The main advantage of trading using opposite EROAD and Aumake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Aumake 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 Aumake will offset losses from the drop in Aumake's long position.| EROAD vs. Minbos Resources | EROAD vs. Tlou Energy | EROAD vs. Encounter Resources | EROAD vs. Elevate Uranium |
| Aumake vs. Perseus Mining | Aumake vs. Galena Mining | Aumake vs. Aspire Mining | Aumake vs. Hutchison Telecommunications |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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