Correlation Between Aurelia Metals and Focus Graphite

Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and Focus Graphite 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 Focus Graphite 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 Focus Graphite, you can compare the effects of market volatilities on Aurelia Metals and Focus Graphite 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 Focus Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Focus Graphite.

Diversification Opportunities for Aurelia Metals and Focus Graphite

-0.15

Correlation Coefficient

Aurelia Metals  Focus Graphite

Good diversification

The 3 months correlation between Aurelia and Focus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite 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 Focus Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Graphite has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Focus Graphite go up and down completely randomly.

Pair Corralation between Aurelia Metals and Focus Graphite

Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 0.36 times more return on investment than Focus Graphite. However, Aurelia Metals Limited is 2.79 times less risky than Focus Graphite. It trades about 0.02 of its potential returns per unit of risk. Focus Graphite is currently generating about -0.04 per unit of risk. If you would invest  15.00  in Aurelia Metals Limited on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Aurelia Metals Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Aurelia Metals Limited  vs.  Focus Graphite

Aurelia Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aurelia Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Focus Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary 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 Aurelia Metals and Focus Graphite

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

The idea behind Aurelia Metals Limited and Focus Graphite 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.