Correlation Between F3 Uranium and Aura Energy

Can any of the company-specific risk be diversified away by investing in both F3 Uranium and Aura Energy 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 F3 Uranium and Aura Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between F3 Uranium Corp and Aura Energy Limited, you can compare the effects of market volatilities on F3 Uranium and Aura Energy 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 F3 Uranium with a short position of Aura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of F3 Uranium and Aura Energy.

Diversification Opportunities for F3 Uranium and Aura Energy

0.62

Correlation Coefficient

F3 Uranium  Aura Energy

Poor diversification

The 3 months correlation between FUUFF and Aura is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding F3 Uranium Corp and Aura Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Energy Limited and F3 Uranium 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 F3 Uranium Corp are associated (or correlated) with Aura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Energy Limited has no effect on the direction of F3 Uranium i.e., F3 Uranium and Aura Energy go up and down completely randomly.

Pair Corralation between F3 Uranium and Aura Energy

Assuming the 90 days horizon F3 Uranium Corp is expected to under-perform the Aura Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, F3 Uranium Corp is 1.33 times less risky than Aura Energy. The otc stock trades about -0.05 of its potential returns per unit of risk. The Aura Energy Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Aura Energy Limited on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Aura Energy Limited or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

F3 Uranium Corp  vs.  Aura Energy Limited

F3 Uranium Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days F3 Uranium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aura Energy Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Energy Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with F3 Uranium and Aura Energy

The main advantage of trading using opposite F3 Uranium and Aura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F3 Uranium position performs unexpectedly, Aura Energy 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 Aura Energy will offset losses from the drop in Aura Energy's long position.

The idea behind F3 Uranium Corp and Aura Energy 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.