Correlation Between Awale Resources and Sarama Resource
Can any of the company-specific risk be diversified away by investing in both Awale Resources and Sarama Resource 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 Awale Resources and Sarama Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awale Resources and Sarama Resource, you can compare the effects of market volatilities on Awale Resources and Sarama Resource 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 Awale Resources with a short position of Sarama Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awale Resources and Sarama Resource.
Diversification Opportunities for Awale Resources and Sarama Resource
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Awale and Sarama is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Awale Resources and Sarama Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarama Resource and Awale 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 Awale Resources are associated (or correlated) with Sarama Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarama Resource has no effect on the direction of Awale Resources i.e., Awale Resources and Sarama Resource go up and down completely randomly.
Pair Corralation between Awale Resources and Sarama Resource
Assuming the 90 days trading horizon Awale Resources is expected to generate 0.34 times more return on investment than Sarama Resource. However, Awale Resources is 2.96 times less risky than Sarama Resource. It trades about 0.16 of its potential returns per unit of risk. Sarama Resource is currently generating about -0.06 per unit of risk. If you would invest 42.00 in Awale Resources on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Awale Resources or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Awale Resources vs. Sarama Resource
Performance |
| Timeline |
| Awale Resources |
| Sarama Resource |
Awale Resources and Sarama Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awale Resources and Sarama Resource
The main advantage of trading using opposite Awale Resources and Sarama Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awale Resources position performs unexpectedly, Sarama Resource 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 Sarama Resource will offset losses from the drop in Sarama Resource's long position.| Awale Resources vs. First Majestic Silver | Awale Resources vs. Ivanhoe Energy | Awale Resources vs. Orezone Gold Corp | Awale Resources vs. Faraday Copper Corp |
| Sarama Resource vs. First Majestic Silver | Sarama Resource vs. Ivanhoe Energy | Sarama Resource vs. Orezone Gold Corp | Sarama Resource vs. Faraday Copper Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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