Correlation Between Aurania Resources and Barings BDC

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

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

Diversification Opportunities for Aurania Resources and Barings BDC

-0.73

Correlation Coefficient

Aurania Resources  Barings BDC

Pay attention - limited upside

The 3 months correlation between Aurania and Barings is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aurania Resources and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Aurania Resources 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 Aurania Resources are associated (or correlated) with Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of Aurania Resources i.e., Aurania Resources and Barings BDC go up and down completely randomly.

Pair Corralation between Aurania Resources and Barings BDC

Assuming the 90 days horizon Aurania Resources is expected to under-perform the Barings BDC. In addition to that, Aurania Resources is 7.35 times more volatile than Barings BDC. It trades about -0.05 of its total potential returns per unit of risk. Barings BDC is currently generating about 0.08 per unit of volatility. If you would invest  982.00  in Barings BDC on August 31, 2024 and sell it today you would earn a total of  43.00  from holding Barings BDC or generate 4.38% return on investment over 90 days.

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

Aurania Resources  vs.  Barings BDC

Aurania Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurania Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Barings BDC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aurania Resources and Barings BDC

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

The idea behind Aurania Resources and Barings BDC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.