Correlation Between GoviEx Uranium and Aura Energy

Can any of the company-specific risk be diversified away by investing in both GoviEx 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 GoviEx 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 GoviEx Uranium and Aura Energy Limited, you can compare the effects of market volatilities on GoviEx 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 GoviEx Uranium with a short position of Aura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoviEx Uranium and Aura Energy.

Diversification Opportunities for GoviEx Uranium and Aura Energy

0.05

Correlation Coefficient

GoviEx Uranium  Aura Energy

Significant diversification

The 3 months correlation between GoviEx and Aura is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding GoviEx Uranium 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 GoviEx 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 GoviEx Uranium 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 GoviEx Uranium i.e., GoviEx Uranium and Aura Energy go up and down completely randomly.

Pair Corralation between GoviEx Uranium and Aura Energy

Assuming the 90 days horizon GoviEx Uranium is expected to generate 2.42 times more return on investment than Aura Energy. However, GoviEx Uranium is 2.42 times more volatile than Aura Energy Limited. It trades about 0.06 of its potential returns per unit of risk. Aura Energy Limited is currently generating about -0.05 per unit of risk. If you would invest  3.10  in GoviEx Uranium on December 28, 2024 and sell it today you would earn a total of  0.20  from holding GoviEx Uranium or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

GoviEx Uranium  vs.  Aura Energy Limited

GoviEx Uranium

Risk-Adjusted Performance

Insignificant

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

Aura Energy Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aura Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GoviEx Uranium and Aura Energy

The main advantage of trading using opposite GoviEx Uranium and Aura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoviEx 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 GoviEx Uranium 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.