Correlation Between EROAD and Kingsrose Mining
Can any of the company-specific risk be diversified away by investing in both EROAD and Kingsrose Mining 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 EROAD and Kingsrose Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Kingsrose Mining, you can compare the effects of market volatilities on EROAD and Kingsrose Mining 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 EROAD with a short position of Kingsrose Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Kingsrose Mining.
Diversification Opportunities for EROAD and Kingsrose Mining
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EROAD and Kingsrose is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Kingsrose Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsrose Mining and EROAD 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 EROAD are associated (or correlated) with Kingsrose Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsrose Mining has no effect on the direction of EROAD i.e., EROAD and Kingsrose Mining go up and down completely randomly.
Pair Corralation between EROAD and Kingsrose Mining
Assuming the 90 days trading horizon EROAD is expected to generate 0.73 times more return on investment than Kingsrose Mining. However, EROAD is 1.38 times less risky than Kingsrose Mining. It trades about 0.0 of its potential returns per unit of risk. Kingsrose Mining is currently generating about -0.02 per unit of risk. If you would invest 93.00 in EROAD on September 1, 2024 and sell it today you would lose (6.00) from holding EROAD or give up 6.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. Kingsrose Mining
Performance |
| Timeline |
| EROAD |
| Kingsrose Mining |
EROAD and Kingsrose Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Kingsrose Mining
The main advantage of trading using opposite EROAD and Kingsrose Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Kingsrose Mining 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 Kingsrose Mining will offset losses from the drop in Kingsrose Mining's long position.| EROAD vs. Centuria Industrial Reit | EROAD vs. Sky Metals | EROAD vs. The Environmental Group | EROAD vs. Qbe Insurance Group |
| Kingsrose Mining vs. Northern Star Resources | Kingsrose Mining vs. Evolution Mining | Kingsrose Mining vs. Bluescope Steel | Kingsrose Mining vs. Sandfire Resources NL |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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