Correlation Between Metallic Minerals and Aurania Resources

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

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

Diversification Opportunities for Metallic Minerals and Aurania Resources

0.53

Correlation Coefficient

Metallic Minerals  Aurania Resources

Very weak diversification

The 3 months correlation between Metallic and Aurania is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Metallic Minerals Corp and Aurania Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurania Resources and Metallic Minerals 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 Metallic Minerals Corp 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 Metallic Minerals i.e., Metallic Minerals and Aurania Resources go up and down completely randomly.

Pair Corralation between Metallic Minerals and Aurania Resources

Assuming the 90 days horizon Metallic Minerals Corp is expected to under-perform the Aurania Resources. In addition to that, Metallic Minerals is 1.14 times more volatile than Aurania Resources. It trades about -0.05 of its total potential returns per unit of risk. Aurania Resources is currently generating about -0.05 per unit of volatility. If you would invest  46.00  in Aurania Resources on September 2, 2024 and sell it today you would lose (14.00) from holding Aurania Resources or give up 30.43% of portfolio value over 90 days.

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

Metallic Minerals Corp  vs.  Aurania Resources

Metallic Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aurania Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Metallic Minerals and Aurania Resources

The main advantage of trading using opposite Metallic Minerals and Aurania Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metallic Minerals 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 Metallic Minerals Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.