Correlation Between Caledonia Investments and Amaroq Minerals
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments and Amaroq Minerals 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 Caledonia Investments and Amaroq Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and Amaroq Minerals, you can compare the effects of market volatilities on Caledonia Investments and Amaroq Minerals 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 Caledonia Investments with a short position of Amaroq Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and Amaroq Minerals.
Diversification Opportunities for Caledonia Investments and Amaroq Minerals
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caledonia and Amaroq is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and Amaroq Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaroq Minerals and Caledonia Investments 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 Caledonia Investments are associated (or correlated) with Amaroq Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaroq Minerals has no effect on the direction of Caledonia Investments i.e., Caledonia Investments and Amaroq Minerals go up and down completely randomly.
Pair Corralation between Caledonia Investments and Amaroq Minerals
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 7.91 times less return on investment than Amaroq Minerals. But when comparing it to its historical volatility, Caledonia Investments is 1.47 times less risky than Amaroq Minerals. It trades about 0.02 of its potential returns per unit of risk. Amaroq Minerals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,200 in Amaroq Minerals on November 2, 2024 and sell it today you would earn a total of 6,015 from holding Amaroq Minerals or generate 143.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Investments vs. Amaroq Minerals
Performance |
| Timeline |
| Caledonia Investments |
| Amaroq Minerals |
Caledonia Investments and Amaroq Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and Amaroq Minerals
The main advantage of trading using opposite Caledonia Investments and Amaroq Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments position performs unexpectedly, Amaroq Minerals 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 Amaroq Minerals will offset losses from the drop in Amaroq Minerals' long position.| Caledonia Investments vs. Cornish Metals | Caledonia Investments vs. GreenX Metals | Caledonia Investments vs. European Metals Holdings | Caledonia Investments vs. Ryanair Holdings plc |
| Amaroq Minerals vs. Infineon Technologies AG | Amaroq Minerals vs. Morgan Advanced Materials | Amaroq Minerals vs. Playtech Plc | Amaroq Minerals vs. Ashtead Technology Holdings |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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