Correlation Between Aurelia Metals and Almonty Industries

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

By analyzing existing cross correlation between Aurelia Metals Limited and Almonty Industries, you can compare the effects of market volatilities on Aurelia Metals and Almonty Industries 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 Almonty Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Almonty Industries.

Diversification Opportunities for Aurelia Metals and Almonty Industries

0.33

Correlation Coefficient

Aurelia Metals  Almonty Industries

Weak diversification

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

Pair Corralation between Aurelia Metals and Almonty Industries

Assuming the 90 days horizon Aurelia Metals is expected to generate 1.08 times less return on investment than Almonty Industries. In addition to that, Aurelia Metals is 1.67 times more volatile than Almonty Industries. It trades about 0.14 of its total potential returns per unit of risk. Almonty Industries is currently generating about 0.25 per unit of volatility. If you would invest  65.00  in Almonty Industries on December 1, 2024 and sell it today you would earn a total of  68.00  from holding Almonty Industries or generate 104.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Aurelia Metals Limited  vs.  Almonty Industries

Aurelia Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurelia Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Almonty Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Almonty Industries are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Almonty Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurelia Metals and Almonty Industries

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

The idea behind Aurelia Metals Limited and Almonty Industries 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.