Correlation Between MotorCycle Holdings and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both MotorCycle Holdings 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 MotorCycle Holdings and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MotorCycle Holdings and Aurelia Metals, you can compare the effects of market volatilities on MotorCycle Holdings 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 MotorCycle Holdings with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MotorCycle Holdings and Aurelia Metals.
Diversification Opportunities for MotorCycle Holdings and Aurelia Metals
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MotorCycle and Aurelia is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and MotorCycle Holdings 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 MotorCycle Holdings 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 MotorCycle Holdings i.e., MotorCycle Holdings and Aurelia Metals go up and down completely randomly.
Pair Corralation between MotorCycle Holdings and Aurelia Metals
Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 1.95 times less return on investment than Aurelia Metals. But when comparing it to its historical volatility, MotorCycle Holdings is 1.38 times less risky than Aurelia Metals. It trades about 0.04 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 9.60 in Aurelia Metals on September 2, 2024 and sell it today you would earn a total of 7.40 from holding Aurelia Metals or generate 77.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MotorCycle Holdings vs. Aurelia Metals
Performance |
| Timeline |
| MotorCycle Holdings |
| Aurelia Metals |
MotorCycle Holdings and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MotorCycle Holdings and Aurelia Metals
The main advantage of trading using opposite MotorCycle Holdings and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MotorCycle Holdings 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.| MotorCycle Holdings vs. Summit Resources Limited | MotorCycle Holdings vs. iShares Global Healthcare | MotorCycle Holdings vs. Australian Dairy Farms | MotorCycle Holdings vs. Adriatic Metals Plc |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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