Correlation Between Rackla Metals and Aurion Resources

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

Diversification Opportunities for Rackla Metals and Aurion Resources

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Rackla and Aurion is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rackla Metals and Aurion Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurion Resources and Rackla Metals 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 Rackla Metals are associated (or correlated) with Aurion Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurion Resources has no effect on the direction of Rackla Metals i.e., Rackla Metals and Aurion Resources go up and down completely randomly.

Pair Corralation between Rackla Metals and Aurion Resources

Assuming the 90 days horizon Rackla Metals is expected to generate 12.63 times more return on investment than Aurion Resources. However, Rackla Metals is 12.63 times more volatile than Aurion Resources. It trades about 0.08 of its potential returns per unit of risk. Aurion Resources is currently generating about 0.02 per unit of risk. If you would invest  17.00  in Rackla Metals on August 29, 2024 and sell it today you would lose (10.20) from holding Rackla Metals or give up 60.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Rackla Metals  vs.  Aurion Resources

 Performance 
       Timeline  
Rackla Metals 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Rackla Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rackla Metals reported solid returns over the last few months and may actually be approaching a breakup point.
Aurion Resources 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Aurion Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aurion Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Rackla Metals and Aurion Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rackla Metals and Aurion Resources

The main advantage of trading using opposite Rackla Metals and Aurion Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rackla Metals position performs unexpectedly, Aurion Resources 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 Aurion Resources will offset losses from the drop in Aurion Resources' long position.
The idea behind Rackla Metals and Aurion Resources 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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