Correlation Between Gold79 Mines and Aurania Resources

Can any of the company-specific risk be diversified away by investing in both Gold79 Mines and Aurania Resources 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 Gold79 Mines and Aurania Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold79 Mines and Aurania Resources, you can compare the effects of market volatilities on Gold79 Mines and Aurania Resources 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 Gold79 Mines with a short position of Aurania Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold79 Mines and Aurania Resources.

Diversification Opportunities for Gold79 Mines and Aurania Resources

0.03

Correlation Coefficient

Gold79 Mines  Aurania Resources

Significant diversification

The 3 months correlation between Gold79 and Aurania is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gold79 Mines and Aurania Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurania Resources and Gold79 Mines 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 Gold79 Mines are associated (or correlated) with Aurania Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurania Resources has no effect on the direction of Gold79 Mines i.e., Gold79 Mines and Aurania Resources go up and down completely randomly.

Pair Corralation between Gold79 Mines and Aurania Resources

Assuming the 90 days horizon Gold79 Mines is expected to generate 0.87 times more return on investment than Aurania Resources. However, Gold79 Mines is 1.15 times less risky than Aurania Resources. It trades about 0.1 of its potential returns per unit of risk. Aurania Resources is currently generating about -0.05 per unit of risk. If you would invest  18.00  in Gold79 Mines on September 4, 2024 and sell it today you would earn a total of  5.00  from holding Gold79 Mines or generate 27.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Gold79 Mines  vs.  Aurania Resources

Gold79 Mines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold79 Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Gold79 Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Aurania Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurania Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gold79 Mines and Aurania Resources

The main advantage of trading using opposite Gold79 Mines and Aurania Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold79 Mines position performs unexpectedly, Aurania Resources 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 Aurania Resources will offset losses from the drop in Aurania Resources' long position.

The idea behind Gold79 Mines and Aurania Resources 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.