Correlation Between Decade Resources and Sego Resources
Can any of the company-specific risk be diversified away by investing in both Decade Resources and Sego 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 Decade Resources and Sego Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decade Resources and Sego Resources, you can compare the effects of market volatilities on Decade Resources and Sego 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 Decade Resources with a short position of Sego Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decade Resources and Sego Resources.
Diversification Opportunities for Decade Resources and Sego Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Decade and Sego is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Decade Resources and Sego Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sego Resources and Decade 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 Decade Resources are associated (or correlated) with Sego Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sego Resources has no effect on the direction of Decade Resources i.e., Decade Resources and Sego Resources go up and down completely randomly.
Pair Corralation between Decade Resources and Sego Resources
Assuming the 90 days horizon Decade Resources is expected to generate 3.29 times less return on investment than Sego Resources. But when comparing it to its historical volatility, Decade Resources is 1.14 times less risky than Sego Resources. It trades about 0.05 of its potential returns per unit of risk. Sego Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Sego Resources on October 20, 2024 and sell it today you would earn a total of 0.50 from holding Sego Resources or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Decade Resources vs. Sego Resources
Performance |
| Timeline |
| Decade Resources |
| Sego Resources |
Decade Resources and Sego Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decade Resources and Sego Resources
The main advantage of trading using opposite Decade Resources and Sego Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decade Resources position performs unexpectedly, Sego 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 Sego Resources will offset losses from the drop in Sego Resources' long position.| Decade Resources vs. First Majestic Silver | Decade Resources vs. Ivanhoe Energy | Decade Resources vs. Flinders Resources Limited | Decade Resources vs. Orezone Gold Corp |
| Sego Resources vs. First Majestic Silver | Sego Resources vs. Ivanhoe Energy | Sego Resources vs. Flinders Resources Limited | Sego Resources vs. Orezone Gold Corp |
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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