Correlation Between Aurelia Metals and Interra Copper

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

Diversification Opportunities for Aurelia Metals and Interra Copper

0.01

Correlation Coefficient

Aurelia Metals  Interra Copper

Significant diversification

The 3 months correlation between Aurelia and Interra is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Interra Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interra Copper 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 Interra Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interra Copper Corp has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Interra Copper go up and down completely randomly.

Pair Corralation between Aurelia Metals and Interra Copper

Assuming the 90 days horizon Aurelia Metals is expected to generate 20.39 times less return on investment than Interra Copper. But when comparing it to its historical volatility, Aurelia Metals Limited is 4.46 times less risky than Interra Copper. It trades about 0.02 of its potential returns per unit of risk. Interra Copper Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6.63  in Interra Copper Corp on September 3, 2024 and sell it today you would lose (0.05) from holding Interra Copper Corp or give up 0.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Aurelia Metals Limited  vs.  Interra Copper Corp

Aurelia Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aurelia Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Interra Copper Corp

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Aurelia Metals and Interra Copper

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

The idea behind Aurelia Metals Limited and Interra Copper 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 Commodity Directory module to find actively traded commodities issued by global exchanges.