Correlation Between Aurelia Metals and Giyani Metals

Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Giyani 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 Aurelia Metals and Giyani Metals 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 Giyani Metals Corp, you can compare the effects of market volatilities on Aurelia Metals and Giyani 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 Aurelia Metals with a short position of Giyani Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Giyani Metals.

Diversification Opportunities for Aurelia Metals and Giyani Metals

-0.42

Correlation Coefficient

Aurelia Metals  Giyani Metals

Very good diversification

The 3 months correlation between Aurelia and Giyani is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Giyani Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giyani Metals Corp 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 Giyani Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giyani Metals Corp has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Giyani Metals go up and down completely randomly.

Pair Corralation between Aurelia Metals and Giyani Metals

Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 1.35 times more return on investment than Giyani Metals. However, Aurelia Metals is 1.35 times more volatile than Giyani Metals Corp. It trades about 0.05 of its potential returns per unit of risk. Giyani Metals Corp is currently generating about 0.03 per unit of risk. If you would invest  9.00  in Aurelia Metals Limited on September 12, 2024 and sell it today you would lose (1.96) from holding Aurelia Metals Limited or give up 21.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.72%
Values	Daily Returns

Aurelia Metals Limited  vs.  Giyani Metals Corp

Aurelia Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurelia Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Giyani Metals Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Giyani Metals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Giyani Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurelia Metals and Giyani Metals

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

The idea behind Aurelia Metals Limited and Giyani Metals 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.