Correlation Between Honey Badger and Aurania Resources

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

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

Diversification Opportunities for Honey Badger and Aurania Resources

-0.04

Correlation Coefficient

Honey Badger  Aurania Resources

Good diversification

The 3 months correlation between Honey and Aurania is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Honey Badger Silver and Aurania Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurania Resources and Honey Badger 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 Honey Badger Silver are associated (or correlated) with Aurania Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurania Resources has no effect on the direction of Honey Badger i.e., Honey Badger and Aurania Resources go up and down completely randomly.

Pair Corralation between Honey Badger and Aurania Resources

Assuming the 90 days horizon Honey Badger Silver is expected to generate 0.69 times more return on investment than Aurania Resources. However, Honey Badger Silver is 1.45 times less risky than Aurania Resources. It trades about 0.04 of its potential returns per unit of risk. Aurania Resources is currently generating about 0.02 per unit of risk. If you would invest  7.43  in Honey Badger Silver on December 29, 2024 and sell it today you would earn a total of  0.38  from holding Honey Badger Silver or generate 5.11% return on investment over 90 days.

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

Honey Badger Silver  vs.  Aurania Resources

Honey Badger Silver

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Honey Badger Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Honey Badger reported solid returns over the last few months and may actually be approaching a breakup point.

Aurania Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurania Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Aurania Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Honey Badger and Aurania Resources

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

The idea behind Honey Badger Silver and Aurania 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.