Correlation Between Major Drilling and De Grey
Can any of the company-specific risk be diversified away by investing in both Major Drilling and De Grey 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 De Grey 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 De Grey Mining, you can compare the effects of market volatilities on Major Drilling and De Grey 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 De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and De Grey.
Diversification Opportunities for Major Drilling and De Grey
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Major and DGD is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Major Drilling i.e., Major Drilling and De Grey go up and down completely randomly.
Pair Corralation between Major Drilling and De Grey
Assuming the 90 days horizon Major Drilling is expected to generate 44.76 times less return on investment than De Grey. But when comparing it to its historical volatility, Major Drilling Group is 1.59 times less risky than De Grey. It trades about 0.0 of its potential returns per unit of risk. De Grey Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 70.00 in De Grey Mining on October 25, 2024 and sell it today you would earn a total of 49.00 from holding De Grey Mining or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. De Grey Mining
Performance |
| Timeline |
| Major Drilling Group |
| De Grey Mining |
Major Drilling and De Grey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and De Grey
The main advantage of trading using opposite Major Drilling and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.| Major Drilling vs. Jacquet Metal Service | Major Drilling vs. Verizon Communications | Major Drilling vs. IMPERIAL TOBACCO | Major Drilling vs. Coeur Mining |
| De Grey vs. VIENNA INSURANCE GR | De Grey vs. Japan Post Insurance | De Grey vs. Safety Insurance Group | De Grey vs. UNIQA INSURANCE GR |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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