Correlation Between Aurion Resources and Tectonic Metals

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

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

Diversification Opportunities for Aurion Resources and Tectonic Metals

0.78

Correlation Coefficient

Aurion Resources  Tectonic Metals

Poor diversification

The 3 months correlation between Aurion and Tectonic is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aurion Resources and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals and Aurion 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 Aurion Resources are associated (or correlated) with Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of Aurion Resources i.e., Aurion Resources and Tectonic Metals go up and down completely randomly.

Pair Corralation between Aurion Resources and Tectonic Metals

Assuming the 90 days horizon Aurion Resources is expected to generate 1.62 times less return on investment than Tectonic Metals. But when comparing it to its historical volatility, Aurion Resources is 1.62 times less risky than Tectonic Metals. It trades about 0.1 of its potential returns per unit of risk. Tectonic Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3.03  in Tectonic Metals on December 30, 2024 and sell it today you would earn a total of  0.81  from holding Tectonic Metals or generate 26.73% return on investment over 90 days.

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

Aurion Resources  vs.  Tectonic Metals

Aurion Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurion Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurion Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Tectonic Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tectonic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurion Resources and Tectonic Metals

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

The idea behind Aurion Resources and Tectonic Metals 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.