Correlation Between Aurelia Metals and Granite Creek

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

Diversification Opportunities for Aurelia Metals and Granite Creek

0.58

Correlation Coefficient

Aurelia Metals  Granite Creek

Very weak diversification

The 3 months correlation between Aurelia and Granite is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Granite Creek Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Creek Copper 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 Granite Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Creek Copper has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Granite Creek go up and down completely randomly.

Pair Corralation between Aurelia Metals and Granite Creek

Assuming the 90 days horizon Aurelia Metals is expected to generate 4.48 times less return on investment than Granite Creek. But when comparing it to its historical volatility, Aurelia Metals Limited is 7.59 times less risky than Granite Creek. It trades about 0.12 of its potential returns per unit of risk. Granite Creek Copper is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.43  in Granite Creek Copper on December 30, 2024 and sell it today you would earn a total of  0.28  from holding Granite Creek Copper or generate 19.58% return on investment over 90 days.

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

Aurelia Metals Limited  vs.  Granite Creek Copper

Aurelia Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurelia Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Granite Creek Copper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Creek Copper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Granite Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurelia Metals and Granite Creek

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

The idea behind Aurelia Metals Limited and Granite Creek Copper 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.