Correlation Between Resmed and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Resmed 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 Resmed and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resmed Inc DRC and Aurelia Metals, you can compare the effects of market volatilities on Resmed 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 Resmed with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resmed and Aurelia Metals.
Diversification Opportunities for Resmed and Aurelia Metals
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Resmed and Aurelia is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Resmed Inc DRC and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and Resmed 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 Resmed Inc DRC 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 Resmed i.e., Resmed and Aurelia Metals go up and down completely randomly.
Pair Corralation between Resmed and Aurelia Metals
Assuming the 90 days trading horizon Resmed is expected to generate 3.09 times less return on investment than Aurelia Metals. But when comparing it to its historical volatility, Resmed Inc DRC is 2.75 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 0.03 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Aurelia Metals on September 2, 2024 and sell it today you would earn a total of 3.00 from holding Aurelia Metals or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resmed Inc DRC vs. Aurelia Metals
Performance |
| Timeline |
| Resmed Inc DRC |
| Aurelia Metals |
Resmed and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resmed and Aurelia Metals
The main advantage of trading using opposite Resmed and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resmed 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 Resmed Inc DRC and Aurelia Metals 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.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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