Correlation Between APA and Aurelia Metals

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

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

Diversification Opportunities for APA and Aurelia Metals

0.62

Correlation Coefficient

APA  Aurelia Metals

Poor diversification

The 3 months correlation between APA and Aurelia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding APA Group and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and APA 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 APA Group are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of APA i.e., APA and Aurelia Metals go up and down completely randomly.

Pair Corralation between APA and Aurelia Metals

Assuming the 90 days trading horizon APA is expected to generate 3.16 times less return on investment than Aurelia Metals. But when comparing it to its historical volatility, APA Group is 2.49 times less risky than Aurelia Metals. It trades about 0.13 of its potential returns per unit of risk. Aurelia Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Aurelia Metals on December 28, 2024 and sell it today you would earn a total of  8.00  from holding Aurelia Metals or generate 44.44% return on investment over 90 days.

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

APA Group  vs.  Aurelia Metals

APA Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APA Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, APA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aurelia Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals are ranked lower than 12 (%) 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.

Pair Trading with APA and Aurelia Metals

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

The idea behind APA Group and Aurelia 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.