Correlation Between Native Mineral and Lindian Resources
Can any of the company-specific risk be diversified away by investing in both Native Mineral and Lindian Resources 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 Native Mineral and Lindian Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Native Mineral Resources and Lindian Resources, you can compare the effects of market volatilities on Native Mineral and Lindian Resources 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 Native Mineral with a short position of Lindian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Native Mineral and Lindian Resources.
Diversification Opportunities for Native Mineral and Lindian Resources
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Native and Lindian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Native Mineral Resources and Lindian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindian Resources and Native Mineral 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 Native Mineral Resources are associated (or correlated) with Lindian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindian Resources has no effect on the direction of Native Mineral i.e., Native Mineral and Lindian Resources go up and down completely randomly.
Pair Corralation between Native Mineral and Lindian Resources
Assuming the 90 days trading horizon Native Mineral Resources is expected to generate 0.78 times more return on investment than Lindian Resources. However, Native Mineral Resources is 1.28 times less risky than Lindian Resources. It trades about 0.32 of its potential returns per unit of risk. Lindian Resources is currently generating about 0.16 per unit of risk. If you would invest 4.00 in Native Mineral Resources on November 9, 2024 and sell it today you would earn a total of 1.50 from holding Native Mineral Resources or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Native Mineral Resources vs. Lindian Resources
Performance |
| Timeline |
| Native Mineral Resources |
| Lindian Resources |
Native Mineral and Lindian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Native Mineral and Lindian Resources
The main advantage of trading using opposite Native Mineral and Lindian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Native Mineral position performs unexpectedly, Lindian Resources 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 Lindian Resources will offset losses from the drop in Lindian Resources' long position.| Native Mineral vs. Future Generation Global | Native Mineral vs. Rubicon Water | Native Mineral vs. Kinatico | Native Mineral vs. Jade Gas Holdings |
| Lindian Resources vs. Rare Foods Australia | Lindian Resources vs. Itech Minerals | Lindian Resources vs. Anteris Technologies | Lindian Resources vs. Energy Technologies Limited |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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