Correlation Between Aurania Resources and Scottie Resources

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

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

Diversification Opportunities for Aurania Resources and Scottie Resources

0.24

Correlation Coefficient

Aurania Resources  Scottie Resources

Modest diversification

The 3 months correlation between Aurania and Scottie is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aurania Resources and Scottie Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottie Resources Corp 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 Scottie Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottie Resources Corp has no effect on the direction of Aurania Resources i.e., Aurania Resources and Scottie Resources go up and down completely randomly.

Pair Corralation between Aurania Resources and Scottie Resources

Assuming the 90 days horizon Aurania Resources is expected to generate 3.68 times less return on investment than Scottie Resources. In addition to that, Aurania Resources is 1.85 times more volatile than Scottie Resources Corp. It trades about 0.01 of its total potential returns per unit of risk. Scottie Resources Corp is currently generating about 0.06 per unit of volatility. If you would invest  58.00  in Scottie Resources Corp on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Scottie Resources Corp or generate 12.07% return on investment over 90 days.

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

Aurania Resources  vs.  Scottie Resources Corp

Aurania Resources

Risk-Adjusted Performance

Weak

Over the last 90 days Aurania Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aurania Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Scottie Resources Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Aurania Resources and Scottie Resources

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

The idea behind Aurania Resources and Scottie Resources Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.