Correlation Between Aura Minerals and Mason Graphite

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

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

Diversification Opportunities for Aura Minerals and Mason Graphite

-0.37

Correlation Coefficient

Aura Minerals  Mason Graphite

Very good diversification

The 3 months correlation between Aura and Mason is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aura Minerals and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite and Aura Minerals 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 Aura Minerals are associated (or correlated) with Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Aura Minerals i.e., Aura Minerals and Mason Graphite go up and down completely randomly.

Pair Corralation between Aura Minerals and Mason Graphite

Assuming the 90 days trading horizon Aura Minerals is expected to generate 0.33 times more return on investment than Mason Graphite. However, Aura Minerals is 3.04 times less risky than Mason Graphite. It trades about 0.14 of its potential returns per unit of risk. Mason Graphite is currently generating about -0.05 per unit of risk. If you would invest  1,338  in Aura Minerals on September 2, 2024 and sell it today you would earn a total of  330.00  from holding Aura Minerals or generate 24.66% return on investment over 90 days.

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

Aura Minerals  vs.  Mason Graphite

Aura Minerals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aura Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Aura Minerals and Mason Graphite

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

The idea behind Aura Minerals and Mason 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.