Correlation Between Berkshire Hathaway and Aurion Resources

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

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

Diversification Opportunities for Berkshire Hathaway and Aurion Resources

0.83

Correlation Coefficient

Berkshire Hathaway  Aurion Resources

Very poor diversification

The 3 months correlation between Berkshire and Aurion is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Aurion Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurion Resources and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Aurion Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurion Resources has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Aurion Resources go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Aurion Resources

Assuming the 90 days horizon Berkshire Hathaway is expected to generate 1.26 times less return on investment than Aurion Resources. But when comparing it to its historical volatility, Berkshire Hathaway is 2.7 times less risky than Aurion Resources. It trades about 0.21 of its potential returns per unit of risk. Aurion Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Aurion Resources on December 30, 2024 and sell it today you would earn a total of  8.00  from holding Aurion Resources or generate 18.18% return on investment over 90 days.

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

Berkshire Hathaway  vs.  Aurion Resources

Berkshire Hathaway

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Berkshire Hathaway sustained solid returns over the last few months and may actually be approaching a breakup point.

Aurion Resources

Risk-Adjusted Performance

OK

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

Pair Trading with Berkshire Hathaway and Aurion Resources

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

The idea behind Berkshire Hathaway and Aurion 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.