Correlation Between International Business and Aurion Resources

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

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

Diversification Opportunities for International Business and Aurion Resources

-0.57

Correlation Coefficient

International Business  Aurion Resources

Excellent diversification

The 3 months correlation between International and Aurion is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Aurion Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurion Resources and International Business 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 International Business Machines are associated (or correlated) with Aurion Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurion Resources has no effect on the direction of International Business i.e., International Business and Aurion Resources go up and down completely randomly.

Pair Corralation between International Business and Aurion Resources

Assuming the 90 days trading horizon International Business Machines is expected to under-perform the Aurion Resources. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 1.41 times less risky than Aurion Resources. The stock trades about -0.16 of its potential returns per unit of risk. The Aurion Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Aurion Resources on March 9, 2024 and sell it today you would lose (3.00) from holding Aurion Resources or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.73%
Values	Daily Returns

International Business Machine  vs.  Aurion Resources

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aurion Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurion Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Aurion Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Business and Aurion Resources

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

The idea behind International Business Machines and Aurion Resources 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.