Correlation Between NEW MILLENNIUM and AURUBIS AG

Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM and AURUBIS AG 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 NEW MILLENNIUM and AURUBIS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NEW MILLENNIUM IRON and AURUBIS AG UNSPADR, you can compare the effects of market volatilities on NEW MILLENNIUM and AURUBIS AG 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 NEW MILLENNIUM with a short position of AURUBIS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and AURUBIS AG.

Diversification Opportunities for NEW MILLENNIUM and AURUBIS AG

0.61

Correlation Coefficient

NEW MILLENNIUM  AURUBIS AG

Poor diversification

The 3 months correlation between NEW and AURUBIS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and AURUBIS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS AG UNSPADR and NEW MILLENNIUM 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 NEW MILLENNIUM IRON are associated (or correlated) with AURUBIS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS AG UNSPADR has no effect on the direction of NEW MILLENNIUM i.e., NEW MILLENNIUM and AURUBIS AG go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and AURUBIS AG

Assuming the 90 days trading horizon NEW MILLENNIUM is expected to generate 1.54 times less return on investment than AURUBIS AG. But when comparing it to its historical volatility, NEW MILLENNIUM IRON is 1.18 times less risky than AURUBIS AG. It trades about 0.06 of its potential returns per unit of risk. AURUBIS AG UNSPADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,280  in AURUBIS AG UNSPADR on October 24, 2024 and sell it today you would earn a total of  340.00  from holding AURUBIS AG UNSPADR or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

NEW MILLENNIUM IRON  vs.  AURUBIS AG UNSPADR

NEW MILLENNIUM IRON

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NEW MILLENNIUM IRON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, NEW MILLENNIUM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AURUBIS AG UNSPADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS AG UNSPADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AURUBIS AG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NEW MILLENNIUM and AURUBIS AG

The main advantage of trading using opposite NEW MILLENNIUM and AURUBIS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM position performs unexpectedly, AURUBIS AG 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 AURUBIS AG will offset losses from the drop in AURUBIS AG's long position.

The idea behind NEW MILLENNIUM IRON and AURUBIS AG UNSPADR 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.