Correlation Between Aurelia Metals and United Tractors

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

Diversification Opportunities for Aurelia Metals and United Tractors

-0.65

Correlation Coefficient

Aurelia Metals  United Tractors

Excellent diversification

The 3 months correlation between Aurelia and United is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and United Tractors Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tractors Tbk 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 United Tractors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tractors Tbk has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and United Tractors go up and down completely randomly.

Pair Corralation between Aurelia Metals and United Tractors

Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 0.31 times more return on investment than United Tractors. However, Aurelia Metals Limited is 3.22 times less risky than United Tractors. It trades about 0.12 of its potential returns per unit of risk. United Tractors Tbk is currently generating about -0.09 per unit of risk. If you would invest  12.00  in Aurelia Metals Limited on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Aurelia Metals Limited or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Aurelia Metals Limited  vs.  United Tractors Tbk

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.

United Tractors Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Tractors Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aurelia Metals and United Tractors

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

The idea behind Aurelia Metals Limited and United Tractors Tbk 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.