Correlation Between Aurelia Metals and Zenith Minerals

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

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

Diversification Opportunities for Aurelia Metals and Zenith Minerals

0.33

Correlation Coefficient

Aurelia Metals  Zenith Minerals

Weak diversification

The 3 months correlation between Aurelia and Zenith is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and Zenith Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenith Minerals 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 Zenith Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenith Minerals has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Zenith Minerals go up and down completely randomly.

Pair Corralation between Aurelia Metals and Zenith Minerals

Assuming the 90 days trading horizon Aurelia Metals is expected to generate 0.82 times more return on investment than Zenith Minerals. However, Aurelia Metals is 1.22 times less risky than Zenith Minerals. It trades about 0.17 of its potential returns per unit of risk. Zenith Minerals is currently generating about 0.09 per unit of risk. If you would invest  17.00  in Aurelia Metals on December 21, 2024 and sell it today you would earn a total of  8.00  from holding Aurelia Metals or generate 47.06% return on investment over 90 days.

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

Aurelia Metals  vs.  Zenith Minerals

Aurelia Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals are ranked lower than 13 (%) 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.

Zenith Minerals

Risk-Adjusted Performance

OK

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

Pair Trading with Aurelia Metals and Zenith Minerals

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

The idea behind Aurelia Metals and Zenith 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.