Correlation Between Nova Minerals and Aurelia Metals

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Can any of the company-specific risk be diversified away by investing in both Nova Minerals 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 Nova Minerals and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Minerals Limited and Aurelia Metals Limited, you can compare the effects of market volatilities on Nova Minerals 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 Nova Minerals with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Minerals and Aurelia Metals.

Diversification Opportunities for Nova Minerals and Aurelia Metals

NovaAureliaDiversified AwayNovaAureliaDiversified Away100%
0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nova and Aurelia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nova Minerals Limited and Aurelia Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and Nova Minerals 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 Nova Minerals Limited 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 Nova Minerals i.e., Nova Minerals and Aurelia Metals go up and down completely randomly.

Pair Corralation between Nova Minerals and Aurelia Metals

Assuming the 90 days horizon Nova Minerals Limited is expected to generate 0.81 times more return on investment than Aurelia Metals. However, Nova Minerals Limited is 1.24 times less risky than Aurelia Metals. It trades about 0.19 of its potential returns per unit of risk. Aurelia Metals Limited is currently generating about 0.04 per unit of risk. If you would invest  11.00  in Nova Minerals Limited on November 25, 2024 and sell it today you would earn a total of  14.00  from holding Nova Minerals Limited or generate 127.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy92.31%
ValuesDaily Returns

Nova Minerals Limited  vs.  Aurelia Metals Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50-40-30-20-10
JavaScript chart by amCharts 3.21.15NVAAF AUMTF
       Timeline  
Nova Minerals Limited 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nova Minerals Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nova Minerals reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.120.140.160.180.20.220.24
Aurelia Metals 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurelia Metals reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.070.080.090.10.110.120.130.140.15

Nova Minerals and Aurelia Metals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-27.12-20.31-13.5-6.690.07.2314.7122.1929.6737.15 0.00350.00400.00450.0050
JavaScript chart by amCharts 3.21.15NVAAF AUMTF
       Returns  

Pair Trading with Nova Minerals and Aurelia Metals

The main advantage of trading using opposite Nova Minerals and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Minerals 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.
The idea behind Nova Minerals Limited and Aurelia Metals Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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