Correlation Between Caledonia Mining and Jadestone Energy
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Jadestone Energy 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 Mining and Jadestone Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Jadestone Energy, you can compare the effects of market volatilities on Caledonia Mining and Jadestone Energy 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 Mining with a short position of Jadestone Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Jadestone Energy.
Diversification Opportunities for Caledonia Mining and Jadestone Energy
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caledonia and Jadestone is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Jadestone Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jadestone Energy and Caledonia 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 Caledonia Mining are associated (or correlated) with Jadestone Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jadestone Energy has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Jadestone Energy go up and down completely randomly.
Pair Corralation between Caledonia Mining and Jadestone Energy
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 0.69 times more return on investment than Jadestone Energy. However, Caledonia Mining is 1.45 times less risky than Jadestone Energy. It trades about 0.0 of its potential returns per unit of risk. Jadestone Energy is currently generating about -0.04 per unit of risk. If you would invest 89,238 in Caledonia Mining on September 14, 2024 and sell it today you would lose (3,738) from holding Caledonia Mining or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 84.0% |
| Values | Daily Returns |
Caledonia Mining vs. Jadestone Energy
Performance |
| Timeline |
| Caledonia Mining |
| Jadestone Energy |
Caledonia Mining and Jadestone Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Jadestone Energy
The main advantage of trading using opposite Caledonia Mining and Jadestone Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Jadestone Energy 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 Jadestone Energy will offset losses from the drop in Jadestone Energy's long position.| Caledonia Mining vs. Allianz Technology Trust | Caledonia Mining vs. HCA Healthcare | Caledonia Mining vs. Worldwide Healthcare Trust | Caledonia Mining vs. Omega Healthcare Investors |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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