Correlation Between Aurelia Metals and Mach7 Technologies

Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Mach7 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 Mach7 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 Mach7 Technologies, you can compare the effects of market volatilities on Aurelia Metals and Mach7 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 Mach7 Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Mach7 Technologies.

Diversification Opportunities for Aurelia Metals and Mach7 Technologies

0.74

Correlation Coefficient

Aurelia Metals  Mach7 Technologies

Poor diversification

The 3 months correlation between Aurelia and Mach7 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and Mach7 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach7 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 Mach7 Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach7 Technologies has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Mach7 Technologies go up and down completely randomly.

Pair Corralation between Aurelia Metals and Mach7 Technologies

Assuming the 90 days trading horizon Aurelia Metals is expected to generate 1.23 times less return on investment than Mach7 Technologies. In addition to that, Aurelia Metals is 1.15 times more volatile than Mach7 Technologies. It trades about 0.08 of its total potential returns per unit of risk. Mach7 Technologies is currently generating about 0.11 per unit of volatility. If you would invest  41.00  in Mach7 Technologies on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Mach7 Technologies or generate 7.32% return on investment over 90 days.

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

Aurelia Metals  vs.  Mach7 Technologies

Aurelia Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Aurelia Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mach7 Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mach7 Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mach7 Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurelia Metals and Mach7 Technologies

The main advantage of trading using opposite Aurelia Metals and Mach7 Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, Mach7 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 Mach7 Technologies will offset losses from the drop in Mach7 Technologies' long position.

The idea behind Aurelia Metals and Mach7 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..