Correlation Between Aurwest Resources and Magna Mining

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

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

Diversification Opportunities for Aurwest Resources and Magna Mining

0.0

Correlation Coefficient

Aurwest Resources  Magna Mining

Pay attention - limited upside

The 3 months correlation between Aurwest and Magna is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aurwest Resources and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and Aurwest Resources 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 Aurwest Resources are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Aurwest Resources i.e., Aurwest Resources and Magna Mining go up and down completely randomly.

Pair Corralation between Aurwest Resources and Magna Mining

Assuming the 90 days horizon Aurwest Resources is expected to under-perform the Magna Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aurwest Resources is 1.39 times less risky than Magna Mining. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Magna Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Magna Mining on December 2, 2024 and sell it today you would earn a total of  50.00  from holding Magna Mining or generate 75.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Aurwest Resources  vs.  Magna Mining

Aurwest Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aurwest Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aurwest Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Magna Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magna Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurwest Resources and Magna Mining

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

The idea behind Aurwest Resources and Magna Mining 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.