Correlation Between Investment and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Investment and Caledonia 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 Investment and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Investment and Caledonia Mining, you can compare the effects of market volatilities on Investment and Caledonia 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 Investment with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Caledonia Mining.
Diversification Opportunities for Investment and Caledonia Mining
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Investment and Caledonia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Investment and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Investment 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 The Investment are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Investment i.e., Investment and Caledonia Mining go up and down completely randomly.
Pair Corralation between Investment and Caledonia Mining
Assuming the 90 days trading horizon The Investment is expected to generate 0.42 times more return on investment than Caledonia Mining. However, The Investment is 2.38 times less risky than Caledonia Mining. It trades about 0.07 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.01 per unit of risk. If you would invest 27,600 in The Investment on August 31, 2024 and sell it today you would earn a total of 10,000 from holding The Investment or generate 36.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Investment vs. Caledonia Mining
Performance |
| Timeline |
| Investment |
| Caledonia Mining |
Investment and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Caledonia Mining
The main advantage of trading using opposite Investment and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Caledonia 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Investment vs. Associated British Foods | Investment vs. United States Steel | Investment vs. Premier Foods PLC | Investment vs. Axfood AB |
| Caledonia Mining vs. Hollywood Bowl Group | Caledonia Mining vs. XLMedia PLC | Caledonia Mining vs. Grand Vision Media | Caledonia Mining vs. Atresmedia |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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