Correlation Between Kingsrose Mining and EROAD
Can any of the company-specific risk be diversified away by investing in both Kingsrose Mining and EROAD 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 Kingsrose Mining and EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingsrose Mining and EROAD, you can compare the effects of market volatilities on Kingsrose Mining and EROAD 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 Kingsrose Mining with a short position of EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsrose Mining and EROAD.
Diversification Opportunities for Kingsrose Mining and EROAD
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kingsrose and EROAD is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kingsrose Mining and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Kingsrose Mining 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 Kingsrose Mining are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Kingsrose Mining i.e., Kingsrose Mining and EROAD go up and down completely randomly.
Pair Corralation between Kingsrose Mining and EROAD
Assuming the 90 days trading horizon Kingsrose Mining is expected to under-perform the EROAD. In addition to that, Kingsrose Mining is 1.38 times more volatile than EROAD. It trades about -0.02 of its total potential returns per unit of risk. EROAD is currently generating about 0.0 per unit of volatility. 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 |
Kingsrose Mining vs. EROAD
Performance |
| Timeline |
| Kingsrose Mining |
| EROAD |
Kingsrose Mining and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingsrose Mining and EROAD
The main advantage of trading using opposite Kingsrose Mining and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingsrose Mining position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Kingsrose Mining vs. Northern Star Resources | Kingsrose Mining vs. Evolution Mining | Kingsrose Mining vs. Bluescope Steel | Kingsrose Mining vs. Sandfire Resources NL |
| EROAD vs. Centuria Industrial Reit | EROAD vs. Sky Metals | EROAD vs. The Environmental Group | EROAD vs. Qbe Insurance Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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