Correlation Between Adex Mining and South32
Can any of the company-specific risk be diversified away by investing in both Adex Mining and South32 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 Adex Mining and South32 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adex Mining and South32 Limited, you can compare the effects of market volatilities on Adex Mining and South32 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 Adex Mining with a short position of South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adex Mining and South32.
Diversification Opportunities for Adex Mining and South32
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adex and South32 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Adex Mining and South32 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 Limited and Adex 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 Adex Mining are associated (or correlated) with South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 Limited has no effect on the direction of Adex Mining i.e., Adex Mining and South32 go up and down completely randomly.
Pair Corralation between Adex Mining and South32
Assuming the 90 days horizon Adex Mining is expected to generate 10.82 times more return on investment than South32. However, Adex Mining is 10.82 times more volatile than South32 Limited. It trades about 0.11 of its potential returns per unit of risk. South32 Limited is currently generating about 0.01 per unit of risk. If you would invest 0.22 in Adex Mining on August 31, 2024 and sell it today you would earn a total of 0.77 from holding Adex Mining or generate 350.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 73.46% |
| Values | Daily Returns |
Adex Mining vs. South32 Limited
Performance |
| Timeline |
| Adex Mining |
| South32 Limited |
Adex Mining and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adex Mining and South32
The main advantage of trading using opposite Adex Mining and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adex Mining position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| Adex Mining vs. South32 Limited | Adex Mining vs. NioCorp Developments Ltd | Adex Mining vs. HUMANA INC | Adex Mining vs. SCOR PK |
| South32 vs. Liontown Resources Limited | South32 vs. ATT Inc | South32 vs. Merck Company | South32 vs. Walt Disney |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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