Correlation Between Aurion Resources and West African

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

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

Diversification Opportunities for Aurion Resources and West African

0.29

Correlation Coefficient

Aurion Resources  West African

Modest diversification

The 3 months correlation between Aurion and West is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aurion Resources and West African Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West African Resources 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 West African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West African Resources has no effect on the direction of Aurion Resources i.e., Aurion Resources and West African go up and down completely randomly.

Pair Corralation between Aurion Resources and West African

Assuming the 90 days horizon Aurion Resources is expected to generate 1.23 times more return on investment than West African. However, Aurion Resources is 1.23 times more volatile than West African Resources. It trades about -0.13 of its potential returns per unit of risk. West African Resources is currently generating about -0.21 per unit of risk. If you would invest  49.00  in Aurion Resources on September 2, 2024 and sell it today you would lose (6.00) from holding Aurion Resources or give up 12.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Aurion Resources  vs.  West African Resources

Aurion Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurion Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurion Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

West African Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aurion Resources and West African

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

The idea behind Aurion Resources and West African Resources 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.