Correlation Between Arcadia Minerals and FSA
Can any of the company-specific risk be diversified away by investing in both Arcadia Minerals and FSA 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 Arcadia Minerals and FSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcadia Minerals Ltd and FSA Group, you can compare the effects of market volatilities on Arcadia Minerals and FSA 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 Arcadia Minerals with a short position of FSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcadia Minerals and FSA.
Diversification Opportunities for Arcadia Minerals and FSA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Arcadia and FSA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Arcadia Minerals Ltd and FSA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSA Group and Arcadia Minerals 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 Arcadia Minerals Ltd are associated (or correlated) with FSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSA Group has no effect on the direction of Arcadia Minerals i.e., Arcadia Minerals and FSA go up and down completely randomly.
Pair Corralation between Arcadia Minerals and FSA
Assuming the 90 days trading horizon Arcadia Minerals Ltd is expected to generate 9.54 times more return on investment than FSA. However, Arcadia Minerals is 9.54 times more volatile than FSA Group. It trades about 0.23 of its potential returns per unit of risk. FSA Group is currently generating about -0.13 per unit of risk. If you would invest 1.90 in Arcadia Minerals Ltd on October 21, 2024 and sell it today you would earn a total of 0.40 from holding Arcadia Minerals Ltd or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arcadia Minerals Ltd vs. FSA Group
Performance |
| Timeline |
| Arcadia Minerals |
| FSA Group |
Arcadia Minerals and FSA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcadia Minerals and FSA
The main advantage of trading using opposite Arcadia Minerals and FSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcadia Minerals position performs unexpectedly, FSA 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 FSA will offset losses from the drop in FSA's long position.| Arcadia Minerals vs. Aussie Broadband | Arcadia Minerals vs. Epsilon Healthcare | Arcadia Minerals vs. Duxton Broadacre Farms | Arcadia Minerals vs. Treasury Wine Estates |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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