Correlation Between Arcadia Minerals and Lindian Resources
Can any of the company-specific risk be diversified away by investing in both Arcadia Minerals and Lindian 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 Arcadia Minerals and Lindian Resources 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 Lindian Resources, you can compare the effects of market volatilities on Arcadia Minerals and Lindian 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 Arcadia Minerals with a short position of Lindian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcadia Minerals and Lindian Resources.
Diversification Opportunities for Arcadia Minerals and Lindian Resources
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Arcadia and Lindian is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Arcadia Minerals Ltd and Lindian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindian Resources 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 Lindian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindian Resources has no effect on the direction of Arcadia Minerals i.e., Arcadia Minerals and Lindian Resources go up and down completely randomly.
Pair Corralation between Arcadia Minerals and Lindian Resources
Assuming the 90 days trading horizon Arcadia Minerals is expected to generate 8.28 times less return on investment than Lindian Resources. But when comparing it to its historical volatility, Arcadia Minerals Ltd is 1.28 times less risky than Lindian Resources. It trades about 0.03 of its potential returns per unit of risk. Lindian Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 8.30 in Lindian Resources on November 9, 2024 and sell it today you would earn a total of 1.70 from holding Lindian Resources or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arcadia Minerals Ltd vs. Lindian Resources
Performance |
| Timeline |
| Arcadia Minerals |
| Lindian Resources |
Arcadia Minerals and Lindian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcadia Minerals and Lindian Resources
The main advantage of trading using opposite Arcadia Minerals and Lindian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcadia Minerals position performs unexpectedly, Lindian 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 Lindian Resources will offset losses from the drop in Lindian Resources' long position.| Arcadia Minerals vs. Hudson Investment Group | Arcadia Minerals vs. Hotel Property Investments | Arcadia Minerals vs. ChemX Materials | Arcadia Minerals vs. Carlton Investments |
| Lindian Resources vs. Rare Foods Australia | Lindian Resources vs. Itech Minerals | Lindian Resources vs. Anteris Technologies | Lindian Resources vs. Energy Technologies Limited |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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