Correlation Between Endeavour Mining and STRAITS TRADG
Can any of the company-specific risk be diversified away by investing in both Endeavour Mining and STRAITS TRADG 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 Endeavour Mining and STRAITS TRADG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endeavour Mining PLC and STRAITS TRADG SD, you can compare the effects of market volatilities on Endeavour Mining and STRAITS TRADG 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 Endeavour Mining with a short position of STRAITS TRADG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endeavour Mining and STRAITS TRADG.
Diversification Opportunities for Endeavour Mining and STRAITS TRADG
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Endeavour and STRAITS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining PLC and STRAITS TRADG SD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAITS TRADG SD and Endeavour Mining 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 Endeavour Mining PLC are associated (or correlated) with STRAITS TRADG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAITS TRADG SD has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and STRAITS TRADG go up and down completely randomly.
Pair Corralation between Endeavour Mining and STRAITS TRADG
Assuming the 90 days trading horizon Endeavour Mining PLC is expected to generate 1.65 times more return on investment than STRAITS TRADG. However, Endeavour Mining is 1.65 times more volatile than STRAITS TRADG SD. It trades about 0.04 of its potential returns per unit of risk. STRAITS TRADG SD is currently generating about 0.03 per unit of risk. If you would invest 1,975 in Endeavour Mining PLC on November 8, 2024 and sell it today you would earn a total of 65.00 from holding Endeavour Mining PLC or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Endeavour Mining PLC vs. STRAITS TRADG SD
Performance |
| Timeline |
| Endeavour Mining PLC |
| STRAITS TRADG SD |
Endeavour Mining and STRAITS TRADG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endeavour Mining and STRAITS TRADG
The main advantage of trading using opposite Endeavour Mining and STRAITS TRADG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endeavour Mining position performs unexpectedly, STRAITS TRADG 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 STRAITS TRADG will offset losses from the drop in STRAITS TRADG's long position.| Endeavour Mining vs. Apple Inc | Endeavour Mining vs. Apple Inc | Endeavour Mining vs. Apple Inc | Endeavour Mining vs. Apple Inc |
| STRAITS TRADG vs. EITZEN CHEMICALS | STRAITS TRADG vs. Soken Chemical Engineering | STRAITS TRADG vs. KINGBOARD CHEMICAL | STRAITS TRADG vs. TIANDE CHEMICAL |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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