Correlation Between Arafura Resources and Medallion Resources
Can any of the company-specific risk be diversified away by investing in both Arafura Resources and Medallion 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 Arafura Resources and Medallion Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arafura Resources and Medallion Resources, you can compare the effects of market volatilities on Arafura Resources and Medallion 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 Arafura Resources with a short position of Medallion Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arafura Resources and Medallion Resources.
Diversification Opportunities for Arafura Resources and Medallion Resources
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arafura and Medallion is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Arafura Resources and Medallion Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medallion Resources and Arafura 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 Arafura Resources are associated (or correlated) with Medallion Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medallion Resources has no effect on the direction of Arafura Resources i.e., Arafura Resources and Medallion Resources go up and down completely randomly.
Pair Corralation between Arafura Resources and Medallion Resources
Assuming the 90 days horizon Arafura Resources is expected to under-perform the Medallion Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arafura Resources is 1.14 times less risky than Medallion Resources. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Medallion Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.26 in Medallion Resources on August 29, 2024 and sell it today you would lose (2.66) from holding Medallion Resources or give up 32.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arafura Resources vs. Medallion Resources
Performance |
| Timeline |
| Arafura Resources |
| Medallion Resources |
Arafura Resources and Medallion Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arafura Resources and Medallion Resources
The main advantage of trading using opposite Arafura Resources and Medallion Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arafura Resources position performs unexpectedly, Medallion 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 Medallion Resources will offset losses from the drop in Medallion Resources' long position.| Arafura Resources vs. Texas Rare Earth | Arafura Resources vs. Lynas Rare Earths | Arafura Resources vs. Ucore Rare Metals | Arafura Resources vs. Aurelia Metals Limited |
| Medallion Resources vs. Canada Rare Earth | Medallion Resources vs. Commerce Resources Corp | Medallion Resources vs. Ucore Rare Metals | Medallion Resources vs. Strategic Metals |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |