Correlation Between Auriant Mining and Embellence Group

Can any of the company-specific risk be diversified away by investing in both Auriant Mining and Embellence Group 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 Auriant Mining and Embellence Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auriant Mining AB and Embellence Group AB, you can compare the effects of market volatilities on Auriant Mining and Embellence Group 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 Auriant Mining with a short position of Embellence Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auriant Mining and Embellence Group.

Diversification Opportunities for Auriant Mining and Embellence Group

0.41

Correlation Coefficient

Auriant Mining  Embellence Group

Very weak diversification

The 3 months correlation between Auriant and Embellence is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Auriant Mining AB and Embellence Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embellence Group and Auriant Mining 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 Auriant Mining AB are associated (or correlated) with Embellence Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embellence Group has no effect on the direction of Auriant Mining i.e., Auriant Mining and Embellence Group go up and down completely randomly.

Pair Corralation between Auriant Mining and Embellence Group

Assuming the 90 days trading horizon Auriant Mining AB is expected to generate 6.17 times more return on investment than Embellence Group. However, Auriant Mining is 6.17 times more volatile than Embellence Group AB. It trades about 0.04 of its potential returns per unit of risk. Embellence Group AB is currently generating about 0.07 per unit of risk. If you would invest  132.00  in Auriant Mining AB on December 2, 2024 and sell it today you would lose (50.00) from holding Auriant Mining AB or give up 37.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.16%
Values	Daily Returns

Auriant Mining AB  vs.  Embellence Group AB

Auriant Mining AB

Risk-Adjusted Performance

Weak

Over the last 90 days Auriant Mining AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Auriant Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Embellence Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embellence Group AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Embellence Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auriant Mining and Embellence Group

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

The idea behind Auriant Mining AB and Embellence Group AB 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.