Correlation Between Lindian Resources and TasFoods
Can any of the company-specific risk be diversified away by investing in both Lindian Resources and TasFoods 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 Lindian Resources and TasFoods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindian Resources and TasFoods, you can compare the effects of market volatilities on Lindian Resources and TasFoods 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 Lindian Resources with a short position of TasFoods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindian Resources and TasFoods.
Diversification Opportunities for Lindian Resources and TasFoods
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lindian and TasFoods is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lindian Resources and TasFoods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TasFoods and Lindian 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 Lindian Resources are associated (or correlated) with TasFoods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TasFoods has no effect on the direction of Lindian Resources i.e., Lindian Resources and TasFoods go up and down completely randomly.
Pair Corralation between Lindian Resources and TasFoods
Assuming the 90 days trading horizon Lindian Resources is expected to generate 2.4 times more return on investment than TasFoods. However, Lindian Resources is 2.4 times more volatile than TasFoods. It trades about 0.01 of its potential returns per unit of risk. TasFoods is currently generating about -0.31 per unit of risk. If you would invest 9.40 in Lindian Resources on September 5, 2024 and sell it today you would lose (0.20) from holding Lindian Resources or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lindian Resources vs. TasFoods
Performance |
| Timeline |
| Lindian Resources |
| TasFoods |
Lindian Resources and TasFoods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindian Resources and TasFoods
The main advantage of trading using opposite Lindian Resources and TasFoods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindian Resources position performs unexpectedly, TasFoods 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 TasFoods will offset losses from the drop in TasFoods' long position.| Lindian Resources vs. Northern Star Resources | Lindian Resources vs. Evolution Mining | Lindian Resources vs. Bluescope Steel | Lindian Resources vs. Sandfire Resources NL |
| TasFoods vs. Audio Pixels Holdings | TasFoods vs. Norwest Minerals | TasFoods vs. Lindian Resources | TasFoods vs. Resource Base |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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