Correlation Between Australian United and Aeon Metals

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Can any of the company-specific risk be diversified away by investing in both Australian United and Aeon Metals 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 Australian United and Aeon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian United Investment and Aeon Metals, you can compare the effects of market volatilities on Australian United and Aeon Metals 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 Australian United with a short position of Aeon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and Aeon Metals.

Diversification Opportunities for Australian United and Aeon Metals

AustralianAeonDiversified AwayAustralianAeonDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Australian and Aeon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Aeon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Metals and Australian United 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 Australian United Investment are associated (or correlated) with Aeon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Metals has no effect on the direction of Australian United i.e., Australian United and Aeon Metals go up and down completely randomly.

Pair Corralation between Australian United and Aeon Metals

If you would invest  1,054  in Australian United Investment on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Australian United Investment or generate 0.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Australian United Investment  vs.  Aeon Metals

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 123456
JavaScript chart by amCharts 3.21.15AUI AML
       Timeline  
Australian United 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Australian United Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Australian United is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10.510.610.710.810.91111.111.211.3
Aeon Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aeon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Aeon Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.0050.00505

Australian United and Aeon Metals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.5-1.87-1.24-0.620.010.631.261.892.52 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15AUI AML
       Returns  

Pair Trading with Australian United and Aeon Metals

The main advantage of trading using opposite Australian United and Aeon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, Aeon Metals 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 Aeon Metals will offset losses from the drop in Aeon Metals' long position.
The idea behind Australian United Investment and Aeon Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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