Correlation Between Faraday Copper and Aurion Resources

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

Diversification Opportunities for Faraday Copper and Aurion Resources

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Faraday and Aurion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Aurion Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurion Resources and Faraday Copper 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 Faraday Copper Corp 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 Faraday Copper i.e., Faraday Copper and Aurion Resources go up and down completely randomly.

Pair Corralation between Faraday Copper and Aurion Resources

Assuming the 90 days trading horizon Faraday Copper is expected to generate 3.68 times less return on investment than Aurion Resources. But when comparing it to its historical volatility, Faraday Copper Corp is 1.29 times less risky than Aurion Resources. It trades about 0.05 of its potential returns per unit of risk. Aurion Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Faraday Copper Corp  vs.  Aurion Resources

 Performance 
       Timeline  
Faraday Copper Corp 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Copper Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Faraday Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Aurion Resources 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
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.

Faraday Copper and Aurion Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Faraday Copper and Aurion Resources

The main advantage of trading using opposite Faraday Copper and Aurion Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper 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 Faraday Copper Corp 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.

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