Correlation Between Valeura Energy and Austral Gold
Can any of the company-specific risk be diversified away by investing in both Valeura Energy and Austral Gold 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 Valeura Energy and Austral Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeura Energy and Austral Gold Limited, you can compare the effects of market volatilities on Valeura Energy and Austral Gold 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 Valeura Energy with a short position of Austral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeura Energy and Austral Gold.
Diversification Opportunities for Valeura Energy and Austral Gold
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valeura and Austral is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Austral Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austral Gold Limited and Valeura Energy 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 Valeura Energy are associated (or correlated) with Austral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austral Gold Limited has no effect on the direction of Valeura Energy i.e., Valeura Energy and Austral Gold go up and down completely randomly.
Pair Corralation between Valeura Energy and Austral Gold
Assuming the 90 days horizon Valeura Energy is expected to generate 7.8 times less return on investment than Austral Gold. But when comparing it to its historical volatility, Valeura Energy is 5.39 times less risky than Austral Gold. It trades about 0.06 of its potential returns per unit of risk. Austral Gold Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.12 in Austral Gold Limited on September 28, 2024 and sell it today you would lose (1.16) from holding Austral Gold Limited or give up 37.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Valeura Energy vs. Austral Gold Limited
Performance |
| Timeline |
| Valeura Energy |
| Austral Gold Limited |
Valeura Energy and Austral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valeura Energy and Austral Gold
The main advantage of trading using opposite Valeura Energy and Austral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeura Energy position performs unexpectedly, Austral Gold 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 Austral Gold will offset losses from the drop in Austral Gold's long position.| Valeura Energy vs. Legacy Education | Valeura Energy vs. Apple Inc | Valeura Energy vs. NVIDIA | Valeura Energy vs. Microsoft |
| Austral Gold vs. Compania de Minas | Austral Gold vs. Triple Flag Precious | Austral Gold vs. Zimplats Holdings Limited |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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