Correlation Between Avrupa Minerals and Hannan Metals

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Can any of the company-specific risk be diversified away by investing in both Avrupa Minerals and Hannan Metals 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 Avrupa Minerals and Hannan Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avrupa Minerals and Hannan Metals, you can compare the effects of market volatilities on Avrupa Minerals and Hannan Metals 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 Avrupa Minerals with a short position of Hannan Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avrupa Minerals and Hannan Metals.

Diversification Opportunities for Avrupa Minerals and Hannan Metals

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Avrupa and Hannan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Avrupa Minerals and Hannan Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannan Metals and Avrupa 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 Avrupa Minerals are associated (or correlated) with Hannan Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannan Metals has no effect on the direction of Avrupa Minerals i.e., Avrupa Minerals and Hannan Metals go up and down completely randomly.

Pair Corralation between Avrupa Minerals and Hannan Metals

Assuming the 90 days horizon Avrupa Minerals is expected to under-perform the Hannan Metals. In addition to that, Avrupa Minerals is 1.25 times more volatile than Hannan Metals. It trades about -0.05 of its total potential returns per unit of risk. Hannan Metals is currently generating about 0.15 per unit of volatility. If you would invest  70.00  in Hannan Metals on December 28, 2024 and sell it today you would earn a total of  47.00  from holding Hannan Metals or generate 67.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Avrupa Minerals  vs.  Hannan Metals

 Performance 
       Timeline  
Avrupa Minerals 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Avrupa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Hannan Metals 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Hannan Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hannan Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Avrupa Minerals and Hannan Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avrupa Minerals and Hannan Metals

The main advantage of trading using opposite Avrupa Minerals and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avrupa Minerals position performs unexpectedly, Hannan Metals 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.
The idea behind Avrupa Minerals and Hannan Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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