Correlation Between Aura Energy and GoviEx Uranium

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

By analyzing existing cross correlation between Aura Energy Limited and GoviEx Uranium, you can compare the effects of market volatilities on Aura Energy and GoviEx Uranium 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 Aura Energy with a short position of GoviEx Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Energy and GoviEx Uranium.

Diversification Opportunities for Aura Energy and GoviEx Uranium

0.05

Correlation Coefficient

Aura Energy  GoviEx Uranium

Significant diversification

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

Pair Corralation between Aura Energy and GoviEx Uranium

Assuming the 90 days horizon Aura Energy Limited is expected to under-perform the GoviEx Uranium. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aura Energy Limited is 2.42 times less risky than GoviEx Uranium. The pink sheet trades about -0.05 of its potential returns per unit of risk. The GoviEx Uranium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.10  in GoviEx Uranium on December 28, 2024 and sell it today you would earn a total of  0.20  from holding GoviEx Uranium or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Aura Energy Limited  vs.  GoviEx Uranium

Aura Energy Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aura Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GoviEx Uranium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GoviEx Uranium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GoviEx Uranium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aura Energy and GoviEx Uranium

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

The idea behind Aura Energy Limited and GoviEx Uranium 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.