Correlation Between Applied Digital and Commander Resources
Can any of the company-specific risk be diversified away by investing in both Applied Digital and Commander 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 Applied Digital and Commander Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Digital and Commander Resources, you can compare the effects of market volatilities on Applied Digital and Commander 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 Applied Digital with a short position of Commander Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Commander Resources.
Diversification Opportunities for Applied Digital and Commander Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and Commander is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources and Applied Digital 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 Applied Digital are associated (or correlated) with Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of Applied Digital i.e., Applied Digital and Commander Resources go up and down completely randomly.
Pair Corralation between Applied Digital and Commander Resources
Given the investment horizon of 90 days Applied Digital is expected to generate 0.91 times more return on investment than Commander Resources. However, Applied Digital is 1.1 times less risky than Commander Resources. It trades about 0.3 of its potential returns per unit of risk. Commander Resources is currently generating about 0.22 per unit of risk. If you would invest 648.00 in Applied Digital on November 27, 2024 and sell it today you would earn a total of 253.00 from holding Applied Digital or generate 39.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Digital vs. Commander Resources
Performance |
| Timeline |
| Applied Digital |
| Commander Resources |
Applied Digital and Commander Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Digital and Commander Resources
The main advantage of trading using opposite Applied Digital and Commander Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Digital position performs unexpectedly, Commander 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 Commander Resources will offset losses from the drop in Commander Resources' long position.| Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
| Commander Resources vs. Themac Resources Group | Commander Resources vs. East Africa Metals | Commander Resources vs. Forsys Metals Corp | Commander Resources vs. American CuMo Mining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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