Correlation Between De Grey and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both De Grey and Capricorn Metals 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 De Grey and Capricorn Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Capricorn Metals, you can compare the effects of market volatilities on De Grey and Capricorn Metals 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 De Grey with a short position of Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Capricorn Metals.
Diversification Opportunities for De Grey and Capricorn Metals
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DEG and Capricorn is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals and De Grey 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 De Grey Mining are associated (or correlated) with Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of De Grey i.e., De Grey and Capricorn Metals go up and down completely randomly.
Pair Corralation between De Grey and Capricorn Metals
Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.86 times more return on investment than Capricorn Metals. However, De Grey Mining is 1.17 times less risky than Capricorn Metals. It trades about 0.4 of its potential returns per unit of risk. Capricorn Metals is currently generating about 0.22 per unit of risk. If you would invest 179.00 in De Grey Mining on October 20, 2024 and sell it today you would earn a total of 22.00 from holding De Grey Mining or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Capricorn Metals
Performance |
| Timeline |
| De Grey Mining |
| Capricorn Metals |
De Grey and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Capricorn Metals
The main advantage of trading using opposite De Grey and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Capricorn Metals 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.| De Grey vs. Readytech Holdings | De Grey vs. Ambertech | De Grey vs. Bailador Technology Invest | De Grey vs. Autosports Group |
| Capricorn Metals vs. Northern Star Resources | Capricorn Metals vs. Evolution Mining | Capricorn Metals vs. Bluescope Steel | Capricorn Metals vs. De Grey Mining |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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