Correlation Between Europa Metals and Auction Technology

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

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

Diversification Opportunities for Europa Metals and Auction Technology

0.03

Correlation Coefficient

Europa Metals  Auction Technology

Significant diversification

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

Pair Corralation between Europa Metals and Auction Technology

Assuming the 90 days trading horizon Europa Metals is expected to under-perform the Auction Technology. In addition to that, Europa Metals is 3.88 times more volatile than Auction Technology Group. It trades about -0.1 of its total potential returns per unit of risk. Auction Technology Group is currently generating about 0.03 per unit of volatility. If you would invest  55,700  in Auction Technology Group on December 24, 2024 and sell it today you would earn a total of  1,000.00  from holding Auction Technology Group or generate 1.8% return on investment over 90 days.

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

Europa Metals  vs.  Auction Technology Group

Europa Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Europa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Auction Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Auction Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Europa Metals and Auction Technology

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

The idea behind Europa Metals and Auction Technology Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.