Correlation Between Clifton Mining and Petra Diamonds
Can any of the company-specific risk be diversified away by investing in both Clifton Mining and Petra Diamonds 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 Clifton Mining and Petra Diamonds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clifton Mining Co and Petra Diamonds Limited, you can compare the effects of market volatilities on Clifton Mining and Petra Diamonds 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 Clifton Mining with a short position of Petra Diamonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clifton Mining and Petra Diamonds.
Diversification Opportunities for Clifton Mining and Petra Diamonds
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clifton and Petra is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Clifton Mining Co and Petra Diamonds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petra Diamonds and Clifton Mining 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 Clifton Mining Co are associated (or correlated) with Petra Diamonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petra Diamonds has no effect on the direction of Clifton Mining i.e., Clifton Mining and Petra Diamonds go up and down completely randomly.
Pair Corralation between Clifton Mining and Petra Diamonds
Given the investment horizon of 90 days Clifton Mining Co is expected to generate 0.71 times more return on investment than Petra Diamonds. However, Clifton Mining Co is 1.4 times less risky than Petra Diamonds. It trades about -0.22 of its potential returns per unit of risk. Petra Diamonds Limited is currently generating about -0.21 per unit of risk. If you would invest 6.00 in Clifton Mining Co on September 2, 2024 and sell it today you would lose (1.00) from holding Clifton Mining Co or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Clifton Mining Co vs. Petra Diamonds Limited
Performance |
| Timeline |
| Clifton Mining |
| Petra Diamonds |
Clifton Mining and Petra Diamonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clifton Mining and Petra Diamonds
The main advantage of trading using opposite Clifton Mining and Petra Diamonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clifton Mining position performs unexpectedly, Petra Diamonds 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 Petra Diamonds will offset losses from the drop in Petra Diamonds' long position.| Clifton Mining vs. Cartier Iron Corp | Clifton Mining vs. Arctic Star Exploration | Clifton Mining vs. Capella Minerals Limited | Clifton Mining vs. Denarius Silver Corp |
| Petra Diamonds vs. Northam Platinum Holdings | Petra Diamonds vs. Clifton Mining Co | Petra Diamonds vs. Cartier Iron Corp | Petra Diamonds vs. Alien 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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