Correlation Between Collins Foods and Minbos Resources
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Minbos 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 Collins Foods and Minbos Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Minbos Resources, you can compare the effects of market volatilities on Collins Foods and Minbos 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 Collins Foods with a short position of Minbos Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Minbos Resources.
Diversification Opportunities for Collins Foods and Minbos Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Collins and Minbos is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Minbos Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minbos Resources and Collins Foods 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 Collins Foods are associated (or correlated) with Minbos Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minbos Resources has no effect on the direction of Collins Foods i.e., Collins Foods and Minbos Resources go up and down completely randomly.
Pair Corralation between Collins Foods and Minbos Resources
Assuming the 90 days trading horizon Collins Foods is expected to generate 0.62 times more return on investment than Minbos Resources. However, Collins Foods is 1.6 times less risky than Minbos Resources. It trades about -0.05 of its potential returns per unit of risk. Minbos Resources is currently generating about -0.3 per unit of risk. If you would invest 735.00 in Collins Foods on October 25, 2024 and sell it today you would lose (11.00) from holding Collins Foods or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Minbos Resources
Performance |
| Timeline |
| Collins Foods |
| Minbos Resources |
Collins Foods and Minbos Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Minbos Resources
The main advantage of trading using opposite Collins Foods and Minbos Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Minbos 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 Minbos Resources will offset losses from the drop in Minbos Resources' long position.| Collins Foods vs. MotorCycle Holdings | Collins Foods vs. 29Metals | Collins Foods vs. Flagship Investments | Collins Foods vs. Spirit Telecom |
| Minbos Resources vs. AiMedia Technologies | Minbos Resources vs. EMvision Medical Devices | Minbos Resources vs. Falcon Metals | Minbos Resources vs. Seven West Media |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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