Correlation Between Champion Iron and Aurion Resources

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

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

Diversification Opportunities for Champion Iron and Aurion Resources

0.55

Correlation Coefficient

Champion Iron  Aurion Resources

Very weak diversification

The 3 months correlation between Champion and Aurion is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Aurion Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurion Resources and Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and Aurion Resources go up and down completely randomly.

Pair Corralation between Champion Iron and Aurion Resources

Assuming the 90 days trading horizon Champion Iron is expected to generate 4.46 times less return on investment than Aurion Resources. In addition to that, Champion Iron is 1.12 times more volatile than Aurion Resources. It trades about 0.03 of its total potential returns per unit of risk. Aurion Resources is currently generating about 0.14 per unit of volatility. If you would invest  53.00  in Aurion Resources on September 4, 2024 and sell it today you would earn a total of  13.00  from holding Aurion Resources or generate 24.53% return on investment over 90 days.

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

Champion Iron  vs.  Aurion Resources

Champion Iron

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Iron are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Champion Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Aurion Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurion Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Aurion Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Iron and Aurion Resources

The main advantage of trading using opposite Champion Iron and Aurion Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron 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 Champion Iron 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.