Correlation Between Aura Minerals and Centamin PLC

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

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

Diversification Opportunities for Aura Minerals and Centamin PLC

0.95

Correlation Coefficient

Aura Minerals  Centamin PLC

Almost no diversification

The 3 months correlation between Aura and Centamin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Aura Minerals and Centamin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centamin PLC 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 Centamin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centamin PLC has no effect on the direction of Aura Minerals i.e., Aura Minerals and Centamin PLC go up and down completely randomly.

Pair Corralation between Aura Minerals and Centamin PLC

Assuming the 90 days trading horizon Aura Minerals is expected to generate 25.45 times less return on investment than Centamin PLC. In addition to that, Aura Minerals is 1.29 times more volatile than Centamin PLC. It trades about 0.01 of its total potential returns per unit of risk. Centamin PLC is currently generating about 0.32 per unit of volatility. If you would invest  193.00  in Centamin PLC on February 1, 2024 and sell it today you would earn a total of  22.00  from holding Centamin PLC or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Aura Minerals  vs.  Centamin PLC

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 unfluctuating basic indicators, Aura Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Centamin PLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Centamin PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Centamin PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aura Minerals and Centamin PLC

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

The idea behind Aura Minerals and Centamin PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.