Correlation Between Azimut Exploration and Aurelia Metals

Can any of the company-specific risk be diversified away by investing in both Azimut Exploration and Aurelia 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 Azimut Exploration and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Azimut Exploration and Aurelia Metals Limited, you can compare the effects of market volatilities on Azimut Exploration and Aurelia 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 Azimut Exploration with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azimut Exploration and Aurelia Metals.

Diversification Opportunities for Azimut Exploration and Aurelia Metals

-0.74

Correlation Coefficient

Azimut Exploration  Aurelia Metals

Pay attention - limited upside

The 3 months correlation between Azimut and Aurelia is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Azimut Exploration and Aurelia Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and Azimut Exploration 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 Azimut Exploration are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Azimut Exploration i.e., Azimut Exploration and Aurelia Metals go up and down completely randomly.

Pair Corralation between Azimut Exploration and Aurelia Metals

Assuming the 90 days horizon Azimut Exploration is expected to under-perform the Aurelia Metals. In addition to that, Azimut Exploration is 3.38 times more volatile than Aurelia Metals Limited. It trades about -0.02 of its total potential returns per unit of risk. Aurelia Metals Limited is currently generating about 0.12 per unit of volatility. If you would invest  12.00  in Aurelia Metals Limited on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Aurelia Metals Limited or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Azimut Exploration  vs.  Aurelia Metals Limited

Azimut Exploration

Risk-Adjusted Performance

Very Weak

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

Aurelia Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurelia Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Azimut Exploration and Aurelia Metals

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

The idea behind Azimut Exploration and Aurelia Metals Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.