Correlation Between Aurelia Metals and Kenorland Minerals

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

Diversification Opportunities for Aurelia Metals and Kenorland Minerals

0.61

Correlation Coefficient

Aurelia Metals  Kenorland Minerals

Poor diversification

The 3 months correlation between Aurelia and Kenorland is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Kenorland Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenorland Minerals 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 Kenorland Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenorland Minerals has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Kenorland Minerals go up and down completely randomly.

Pair Corralation between Aurelia Metals and Kenorland Minerals

Assuming the 90 days horizon Aurelia Metals is expected to generate 1.92 times less return on investment than Kenorland Minerals. But when comparing it to its historical volatility, Aurelia Metals Limited is 3.69 times less risky than Kenorland Minerals. It trades about 0.12 of its potential returns per unit of risk. Kenorland Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Kenorland Minerals on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Kenorland Minerals or generate 11.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Aurelia Metals Limited  vs.  Kenorland Minerals

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.

Kenorland Minerals

Risk-Adjusted Performance

Modest

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

Pair Trading with Aurelia Metals and Kenorland Minerals

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

The idea behind Aurelia Metals Limited and Kenorland Minerals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.