Correlation Between Aurelia Metals and Hansen Technologies

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

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

Diversification Opportunities for Aurelia Metals and Hansen Technologies

-0.05

Correlation Coefficient

Aurelia Metals  Hansen Technologies

Good diversification

The 3 months correlation between Aurelia and Hansen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and Aurelia Metals 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 Aurelia Metals are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Hansen Technologies go up and down completely randomly.

Pair Corralation between Aurelia Metals and Hansen Technologies

Assuming the 90 days trading horizon Aurelia Metals is expected to generate 1.96 times less return on investment than Hansen Technologies. In addition to that, Aurelia Metals is 2.51 times more volatile than Hansen Technologies. It trades about 0.04 of its total potential returns per unit of risk. Hansen Technologies is currently generating about 0.2 per unit of volatility. If you would invest  435.00  in Hansen Technologies on September 17, 2024 and sell it today you would earn a total of  109.00  from holding Hansen Technologies or generate 25.06% return on investment over 90 days.

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

Aurelia Metals  vs.  Hansen Technologies

Aurelia Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Aurelia Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hansen Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansen Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurelia Metals and Hansen Technologies

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

The idea behind Aurelia Metals and Hansen Technologies 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.