Correlation Between DY6 Metals and Aurelia Metals

Can any of the company-specific risk be diversified away by investing in both DY6 Metals and Aurelia 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 DY6 Metals and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DY6 Metals and Aurelia Metals, you can compare the effects of market volatilities on DY6 Metals and Aurelia 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 DY6 Metals with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Aurelia Metals.

Diversification Opportunities for DY6 Metals and Aurelia Metals

0.73

Correlation Coefficient

DY6 Metals  Aurelia Metals

Poor diversification

The 3 months correlation between DY6 and Aurelia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and DY6 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 DY6 Metals are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of DY6 Metals i.e., DY6 Metals and Aurelia Metals go up and down completely randomly.

Pair Corralation between DY6 Metals and Aurelia Metals

Assuming the 90 days trading horizon DY6 Metals is expected to generate 3.79 times more return on investment than Aurelia Metals. However, DY6 Metals is 3.79 times more volatile than Aurelia Metals. It trades about 0.01 of its potential returns per unit of risk. Aurelia Metals is currently generating about 0.04 per unit of risk. If you would invest  24.00  in DY6 Metals on September 30, 2024 and sell it today you would lose (19.50) from holding DY6 Metals or give up 81.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.45%
Values	Daily Returns

DY6 Metals  vs.  Aurelia Metals

DY6 Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DY6 Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DY6 Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aurelia Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurelia Metals has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with DY6 Metals and Aurelia Metals

The main advantage of trading using opposite DY6 Metals and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals position performs unexpectedly, Aurelia 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.

The idea behind DY6 Metals and Aurelia 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.