Correlation Between Aurelia Metals and Aztec Minerals

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

By analyzing existing cross correlation between Aurelia Metals Limited and Aztec Minerals Corp, you can compare the effects of market volatilities on Aurelia Metals and Aztec Minerals 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 Aztec Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Aztec Minerals.

Diversification Opportunities for Aurelia Metals and Aztec Minerals

0.52

Correlation Coefficient

Aurelia Metals  Aztec Minerals

Very weak diversification

The 3 months correlation between Aurelia and Aztec is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Aztec Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aztec Minerals Corp 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 Limited are associated (or correlated) with Aztec Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aztec Minerals Corp has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Aztec Minerals go up and down completely randomly.

Pair Corralation between Aurelia Metals and Aztec Minerals

Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 1.57 times more return on investment than Aztec Minerals. However, Aurelia Metals is 1.57 times more volatile than Aztec Minerals Corp. It trades about 0.03 of its potential returns per unit of risk. Aztec Minerals Corp is currently generating about 0.02 per unit of risk. If you would invest  15.00  in Aurelia Metals Limited on September 26, 2024 and sell it today you would lose (3.00) from holding Aurelia Metals Limited or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Aurelia Metals Limited  vs.  Aztec Minerals Corp

Aurelia Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurelia Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Aztec Minerals Corp

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Aurelia Metals and Aztec Minerals

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

The idea behind Aurelia Metals Limited and Aztec Minerals Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.