Correlation Between Carawine Resources and Resource Base
Can any of the company-specific risk be diversified away by investing in both Carawine Resources and Resource Base 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 Carawine Resources and Resource Base into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carawine Resources Limited and Resource Base, you can compare the effects of market volatilities on Carawine Resources and Resource Base 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 Carawine Resources with a short position of Resource Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carawine Resources and Resource Base.
Diversification Opportunities for Carawine Resources and Resource Base
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Carawine and Resource is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Carawine Resources Limited and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base and Carawine 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 Carawine Resources Limited are associated (or correlated) with Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Carawine Resources i.e., Carawine Resources and Resource Base go up and down completely randomly.
Pair Corralation between Carawine Resources and Resource Base
Assuming the 90 days trading horizon Carawine Resources is expected to generate 1.11 times less return on investment than Resource Base. In addition to that, Carawine Resources is 1.59 times more volatile than Resource Base. It trades about 0.17 of its total potential returns per unit of risk. Resource Base is currently generating about 0.3 per unit of volatility. If you would invest 3.50 in Resource Base on August 30, 2024 and sell it today you would earn a total of 0.70 from holding Resource Base or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Carawine Resources Limited vs. Resource Base
Performance |
| Timeline |
| Carawine Resources |
| Resource Base |
Carawine Resources and Resource Base Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carawine Resources and Resource Base
The main advantage of trading using opposite Carawine Resources and Resource Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carawine Resources position performs unexpectedly, Resource Base 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 Resource Base will offset losses from the drop in Resource Base's long position.| Carawine Resources vs. Northern Star Resources | Carawine Resources vs. Evolution Mining | Carawine Resources vs. Bluescope Steel | Carawine Resources vs. Sandfire Resources NL |
| Resource Base vs. ARN Media Limited | Resource Base vs. Australian Agricultural | Resource Base vs. Red Hill Iron | Resource Base vs. Australian Unity Office |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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