Correlation Between Northern Star and Latin Resources
Can any of the company-specific risk be diversified away by investing in both Northern Star and Latin 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 Northern Star and Latin Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Star Resources and Latin Resources, you can compare the effects of market volatilities on Northern Star and Latin 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 Northern Star with a short position of Latin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Latin Resources.
Diversification Opportunities for Northern Star and Latin Resources
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and Latin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Latin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latin Resources and Northern Star 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 Northern Star Resources are associated (or correlated) with Latin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latin Resources has no effect on the direction of Northern Star i.e., Northern Star and Latin Resources go up and down completely randomly.
Pair Corralation between Northern Star and Latin Resources
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.57 times more return on investment than Latin Resources. However, Northern Star Resources is 1.76 times less risky than Latin Resources. It trades about -0.05 of its potential returns per unit of risk. Latin Resources is currently generating about -0.15 per unit of risk. If you would invest 1,801 in Northern Star Resources on August 31, 2024 and sell it today you would lose (64.00) from holding Northern Star Resources or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Northern Star Resources vs. Latin Resources
Performance |
| Timeline |
| Northern Star Resources |
| Latin Resources |
Northern Star and Latin Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Latin Resources
The main advantage of trading using opposite Northern Star and Latin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Latin 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 Latin Resources will offset losses from the drop in Latin Resources' long position.| Northern Star vs. WiseTech Global Limited | Northern Star vs. Oneview Healthcare PLC | Northern Star vs. Land Homes Group | Northern Star vs. Healthco Healthcare and |
| Latin Resources vs. Ramsay Health Care | Latin Resources vs. BTC Health Limited | Latin Resources vs. Computershare | Latin Resources vs. Richmond Vanadium Technology |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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