Correlation Between Northern Star and Aeon Metals

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

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

Diversification Opportunities for Northern Star and Aeon Metals

0.0

Correlation Coefficient

Northern Star  Aeon Metals

Pay attention - limited upside

The 3 months correlation between Northern and Aeon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Aeon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Metals and Northern Star 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 Northern Star Resources 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 Northern Star i.e., Northern Star and Aeon Metals go up and down completely randomly.

Pair Corralation between Northern Star and Aeon Metals

If you would invest  1,487  in Northern Star Resources on September 3, 2024 and sell it today you would earn a total of  172.00  from holding Northern Star Resources or generate 11.57% return on investment over 90 days.

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

Northern Star Resources  vs.  Aeon Metals

Northern Star Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Star Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Northern Star may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aeon Metals

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Northern Star and Aeon Metals

The main advantage of trading using opposite Northern Star and Aeon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star 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 Northern Star Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..