Correlation Between Lynas Rare and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Lynas Rare and Aurelia Metals 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 Lynas Rare and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lynas Rare Earths and Aurelia Metals, you can compare the effects of market volatilities on Lynas Rare and Aurelia Metals 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 Lynas Rare with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lynas Rare and Aurelia Metals.
Diversification Opportunities for Lynas Rare and Aurelia Metals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lynas and Aurelia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lynas Rare Earths and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and Lynas Rare 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 Lynas Rare Earths are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Lynas Rare i.e., Lynas Rare and Aurelia Metals go up and down completely randomly.
Pair Corralation between Lynas Rare and Aurelia Metals
Assuming the 90 days trading horizon Lynas Rare is expected to generate 4.62 times less return on investment than Aurelia Metals. But when comparing it to its historical volatility, Lynas Rare Earths is 2.24 times less risky than Aurelia Metals. It trades about 0.03 of its potential returns per unit of risk. Aurelia Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Aurelia Metals on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Aurelia Metals or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lynas Rare Earths vs. Aurelia Metals
Performance |
| Timeline |
| Lynas Rare Earths |
| Aurelia Metals |
Lynas Rare and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lynas Rare and Aurelia Metals
The main advantage of trading using opposite Lynas Rare and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lynas Rare position performs unexpectedly, Aurelia Metals 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| Lynas Rare vs. Queste Communications | Lynas Rare vs. Readytech Holdings | Lynas Rare vs. Thorney Technologies | Lynas Rare vs. Computershare |
| Aurelia Metals vs. Northern Star Resources | Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. Sandfire Resources NL |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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