Correlation Between Major Drilling and REGAL ASIAN
Can any of the company-specific risk be diversified away by investing in both Major Drilling and REGAL ASIAN 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 Major Drilling and REGAL ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on Major Drilling and REGAL ASIAN 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 Major Drilling with a short position of REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and REGAL ASIAN.
Diversification Opportunities for Major Drilling and REGAL ASIAN
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Major and REGAL is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS and Major Drilling 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 Major Drilling Group are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of Major Drilling i.e., Major Drilling and REGAL ASIAN go up and down completely randomly.
Pair Corralation between Major Drilling and REGAL ASIAN
Assuming the 90 days horizon Major Drilling Group is expected to generate 1.9 times more return on investment than REGAL ASIAN. However, Major Drilling is 1.9 times more volatile than REGAL ASIAN INVESTMENTS. It trades about 0.04 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.24 per unit of risk. If you would invest 540.00 in Major Drilling Group on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Major Drilling Group or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. REGAL ASIAN INVESTMENTS
Performance |
| Timeline |
| Major Drilling Group |
| REGAL ASIAN INVESTMENTS |
Major Drilling and REGAL ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and REGAL ASIAN
The main advantage of trading using opposite Major Drilling and REGAL ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, REGAL ASIAN 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 REGAL ASIAN will offset losses from the drop in REGAL ASIAN's long position.| Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Vale SA | Major Drilling vs. Vale SA |
| REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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