Correlation Between Aldebaran Resources and Base Resources
Can any of the company-specific risk be diversified away by investing in both Aldebaran Resources and Base 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 Aldebaran Resources and Base Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldebaran Resources and Base Resources Limited, you can compare the effects of market volatilities on Aldebaran Resources and Base 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 Aldebaran Resources with a short position of Base Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldebaran Resources and Base Resources.
Diversification Opportunities for Aldebaran Resources and Base Resources
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aldebaran and Base is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aldebaran Resources and Base Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Base Resources and Aldebaran Resources 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 Aldebaran Resources are associated (or correlated) with Base Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Base Resources has no effect on the direction of Aldebaran Resources i.e., Aldebaran Resources and Base Resources go up and down completely randomly.
Pair Corralation between Aldebaran Resources and Base Resources
Assuming the 90 days horizon Aldebaran Resources is expected to generate 2.98 times less return on investment than Base Resources. But when comparing it to its historical volatility, Aldebaran Resources is 3.73 times less risky than Base Resources. It trades about 0.1 of its potential returns per unit of risk. Base Resources Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5.49 in Base Resources Limited on September 1, 2024 and sell it today you would earn a total of 14.51 from holding Base Resources Limited or generate 264.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.87% |
| Values | Daily Returns |
Aldebaran Resources vs. Base Resources Limited
Performance |
| Timeline |
| Aldebaran Resources |
| Base Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Aldebaran Resources and Base Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldebaran Resources and Base Resources
The main advantage of trading using opposite Aldebaran Resources and Base Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldebaran Resources position performs unexpectedly, Base 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 Base Resources will offset losses from the drop in Base Resources' long position.| Aldebaran Resources vs. Huntsman Exploration | Aldebaran Resources vs. Aurelia Metals Limited | Aldebaran Resources vs. Adriatic Metals PLC | Aldebaran Resources vs. American Helium |
| Base Resources vs. Macmahon Holdings Limited | Base Resources vs. Rokmaster Resources Corp | Base Resources vs. Hudson Resources | Base Resources vs. Thunder Gold Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |