Correlation Between Indiana Resources and Techgen Metals
Can any of the company-specific risk be diversified away by investing in both Indiana Resources and Techgen 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 Indiana Resources and Techgen Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indiana Resources and Techgen Metals, you can compare the effects of market volatilities on Indiana Resources and Techgen 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 Indiana Resources with a short position of Techgen Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indiana Resources and Techgen Metals.
Diversification Opportunities for Indiana Resources and Techgen Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indiana and Techgen is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Indiana Resources and Techgen Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techgen Metals and Indiana 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 Indiana Resources are associated (or correlated) with Techgen Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techgen Metals has no effect on the direction of Indiana Resources i.e., Indiana Resources and Techgen Metals go up and down completely randomly.
Pair Corralation between Indiana Resources and Techgen Metals
Assuming the 90 days trading horizon Indiana Resources is expected to generate 0.53 times more return on investment than Techgen Metals. However, Indiana Resources is 1.87 times less risky than Techgen Metals. It trades about 0.1 of its potential returns per unit of risk. Techgen Metals is currently generating about 0.03 per unit of risk. If you would invest 5.18 in Indiana Resources on September 19, 2024 and sell it today you would earn a total of 0.82 from holding Indiana Resources or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Indiana Resources vs. Techgen Metals
Performance |
| Timeline |
| Indiana Resources |
| Techgen Metals |
Indiana Resources and Techgen Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indiana Resources and Techgen Metals
The main advantage of trading using opposite Indiana Resources and Techgen Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indiana Resources position performs unexpectedly, Techgen 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 Techgen Metals will offset losses from the drop in Techgen Metals' long position.| Indiana Resources vs. Northern Star Resources | Indiana Resources vs. Evolution Mining | Indiana Resources vs. Bluescope Steel | Indiana Resources vs. Sandfire Resources NL |
| Techgen Metals vs. Prime Financial Group | Techgen Metals vs. Phoslock Environmental Technologies | Techgen Metals vs. Kneomedia | Techgen Metals vs. National Australia Bank |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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