Correlation Between Aurelia Metals and BSP Financial

Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and BSP Financial 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 Aurelia Metals and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aurelia Metals and BSP Financial Group, you can compare the effects of market volatilities on Aurelia Metals and BSP Financial 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 Aurelia Metals with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and BSP Financial.

Diversification Opportunities for Aurelia Metals and BSP Financial

-0.17

Correlation Coefficient

Aurelia Metals  BSP Financial

Good diversification

The 3 months correlation between Aurelia and BSP is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and BSP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSP Financial Group and Aurelia Metals 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 Aurelia Metals are associated (or correlated) with BSP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSP Financial Group has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and BSP Financial go up and down completely randomly.

Pair Corralation between Aurelia Metals and BSP Financial

Assuming the 90 days trading horizon Aurelia Metals is expected to generate 2.41 times more return on investment than BSP Financial. However, Aurelia Metals is 2.41 times more volatile than BSP Financial Group. It trades about 0.07 of its potential returns per unit of risk. BSP Financial Group is currently generating about 0.06 per unit of risk. If you would invest  9.20  in Aurelia Metals on September 26, 2024 and sell it today you would earn a total of  7.80  from holding Aurelia Metals or generate 84.78% return on investment over 90 days.

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

Aurelia Metals  vs.  BSP Financial Group

Aurelia Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Aurelia Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BSP Financial Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BSP Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, BSP Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aurelia Metals and BSP Financial

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

The idea behind Aurelia Metals and BSP Financial Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.