Correlation Between Aldebaran Resources and Avrupa Minerals

Can any of the company-specific risk be diversified away by investing in both Aldebaran Resources and Avrupa Minerals 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 Aldebaran Resources and Avrupa Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aldebaran Resources and Avrupa Minerals, you can compare the effects of market volatilities on Aldebaran Resources and Avrupa Minerals 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 Aldebaran Resources with a short position of Avrupa Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldebaran Resources and Avrupa Minerals.

Diversification Opportunities for Aldebaran Resources and Avrupa Minerals

0.21

Correlation Coefficient

Aldebaran Resources  Avrupa Minerals

Modest diversification

The 3 months correlation between Aldebaran and Avrupa is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aldebaran Resources and Avrupa Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avrupa Minerals and Aldebaran 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 Aldebaran Resources are associated (or correlated) with Avrupa Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avrupa Minerals has no effect on the direction of Aldebaran Resources i.e., Aldebaran Resources and Avrupa Minerals go up and down completely randomly.

Pair Corralation between Aldebaran Resources and Avrupa Minerals

Assuming the 90 days horizon Aldebaran Resources is expected to generate 0.59 times more return on investment than Avrupa Minerals. However, Aldebaran Resources is 1.69 times less risky than Avrupa Minerals. It trades about 0.06 of its potential returns per unit of risk. Avrupa Minerals is currently generating about -0.02 per unit of risk. If you would invest  136.00  in Aldebaran Resources on December 27, 2024 and sell it today you would earn a total of  13.00  from holding Aldebaran Resources or generate 9.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aldebaran Resources  vs.  Avrupa Minerals

Aldebaran Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aldebaran Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aldebaran Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Avrupa Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avrupa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Aldebaran Resources and Avrupa Minerals

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

The idea behind Aldebaran Resources and Avrupa Minerals 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.