Correlation Between Eros Resources and South Star
Can any of the company-specific risk be diversified away by investing in both Eros Resources and South Star 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 Eros Resources and South Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eros Resources Corp and South Star Battery, you can compare the effects of market volatilities on Eros Resources and South Star 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 Eros Resources with a short position of South Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros Resources and South Star.
Diversification Opportunities for Eros Resources and South Star
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eros and South is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and South Star Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Star Battery and Eros 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 Eros Resources Corp are associated (or correlated) with South Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Star Battery has no effect on the direction of Eros Resources i.e., Eros Resources and South Star go up and down completely randomly.
Pair Corralation between Eros Resources and South Star
Assuming the 90 days horizon Eros Resources Corp is expected to generate 0.9 times more return on investment than South Star. However, Eros Resources Corp is 1.11 times less risky than South Star. It trades about 0.16 of its potential returns per unit of risk. South Star Battery is currently generating about -0.06 per unit of risk. If you would invest 3.40 in Eros Resources Corp on November 9, 2024 and sell it today you would earn a total of 0.80 from holding Eros Resources Corp or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Eros Resources Corp vs. South Star Battery
Performance |
| Timeline |
| Eros Resources Corp |
| South Star Battery |
Eros Resources and South Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eros Resources and South Star
The main advantage of trading using opposite Eros Resources and South Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros Resources position performs unexpectedly, South Star 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 South Star will offset losses from the drop in South Star's long position.| Eros Resources vs. Strategic Resources | Eros Resources vs. ZincX Resources Corp | Eros Resources vs. Nuinsco Resources Limited | Eros Resources vs. Tower Resources |
| South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Qubec Nickel Corp | South Star vs. Strategic Resources |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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