Correlation Between Aura Minerals and MRV Engenharia

Can any of the company-specific risk be diversified away by investing in both Aura Minerals and MRV Engenharia 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 Aura Minerals and MRV Engenharia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aura Minerals and MRV Engenharia e, you can compare the effects of market volatilities on Aura Minerals and MRV Engenharia 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 Aura Minerals with a short position of MRV Engenharia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Minerals and MRV Engenharia.

Diversification Opportunities for Aura Minerals and MRV Engenharia

0.48

Correlation Coefficient

Aura Minerals  MRV Engenharia

Very weak diversification

The 3 months correlation between Aura and MRV is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aura Minerals and MRV Engenharia e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRV Engenharia e and Aura Minerals 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 Aura Minerals are associated (or correlated) with MRV Engenharia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRV Engenharia e has no effect on the direction of Aura Minerals i.e., Aura Minerals and MRV Engenharia go up and down completely randomly.

Pair Corralation between Aura Minerals and MRV Engenharia

Assuming the 90 days trading horizon Aura Minerals is expected to generate 0.76 times more return on investment than MRV Engenharia. However, Aura Minerals is 1.32 times less risky than MRV Engenharia. It trades about 0.19 of its potential returns per unit of risk. MRV Engenharia e is currently generating about -0.05 per unit of risk. If you would invest  2,324  in Aura Minerals on November 28, 2024 and sell it today you would earn a total of  714.00  from holding Aura Minerals or generate 30.72% return on investment over 90 days.

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

Aura Minerals  vs.  MRV Engenharia e

Aura Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Minerals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aura Minerals sustained solid returns over the last few months and may actually be approaching a breakup point.

MRV Engenharia e

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRV Engenharia e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aura Minerals and MRV Engenharia

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

The idea behind Aura Minerals and MRV Engenharia e 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.