Correlation Between CANASIL RESOURCES and AEON METALS

Can any of the company-specific risk be diversified away by investing in both CANASIL RESOURCES and AEON 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 CANASIL RESOURCES and AEON METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CANASIL RESOURCES and AEON METALS LTD, you can compare the effects of market volatilities on CANASIL RESOURCES and AEON 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 CANASIL RESOURCES with a short position of AEON METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANASIL RESOURCES and AEON METALS.

Diversification Opportunities for CANASIL RESOURCES and AEON METALS

-1.0

Correlation Coefficient

CANASIL RESOURCES  AEON METALS

Pay attention - limited upside

The 3 months correlation between CANASIL and AEON is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding CANASIL RESOURCES and AEON METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON METALS LTD and CANASIL RESOURCES 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 CANASIL RESOURCES are associated (or correlated) with AEON METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON METALS LTD has no effect on the direction of CANASIL RESOURCES i.e., CANASIL RESOURCES and AEON METALS go up and down completely randomly.

Pair Corralation between CANASIL RESOURCES and AEON METALS

Assuming the 90 days trading horizon CANASIL RESOURCES is expected to generate 6.02 times less return on investment than AEON METALS. But when comparing it to its historical volatility, CANASIL RESOURCES is 3.32 times less risky than AEON METALS. It trades about 0.09 of its potential returns per unit of risk. AEON METALS LTD is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.40  in AEON METALS LTD on October 22, 2024 and sell it today you would lose (0.35) from holding AEON METALS LTD or give up 87.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CANASIL RESOURCES  vs.  AEON METALS LTD

CANASIL RESOURCES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CANASIL RESOURCES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, CANASIL RESOURCES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

AEON METALS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEON METALS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AEON METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CANASIL RESOURCES and AEON METALS

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

The idea behind CANASIL RESOURCES and AEON METALS LTD 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.