Correlation Between Pacific Imperial and Rathdowney Resources

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Can any of the company-specific risk be diversified away by investing in both Pacific Imperial and Rathdowney 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 Pacific Imperial and Rathdowney Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Imperial Mines and Rathdowney Resources, you can compare the effects of market volatilities on Pacific Imperial and Rathdowney 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 Pacific Imperial with a short position of Rathdowney Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Imperial and Rathdowney Resources.

Diversification Opportunities for Pacific Imperial and Rathdowney Resources

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Pacific and Rathdowney is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Imperial Mines and Rathdowney Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rathdowney Resources and Pacific Imperial 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 Pacific Imperial Mines are associated (or correlated) with Rathdowney Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rathdowney Resources has no effect on the direction of Pacific Imperial i.e., Pacific Imperial and Rathdowney Resources go up and down completely randomly.

Pair Corralation between Pacific Imperial and Rathdowney Resources

Assuming the 90 days horizon Pacific Imperial Mines is expected to generate 1.22 times more return on investment than Rathdowney Resources. However, Pacific Imperial is 1.22 times more volatile than Rathdowney Resources. It trades about 0.07 of its potential returns per unit of risk. Rathdowney Resources is currently generating about 0.05 per unit of risk. If you would invest  1.50  in Pacific Imperial Mines on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Pacific Imperial Mines or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pacific Imperial Mines  vs.  Rathdowney Resources

 Performance 
       Timeline  
Pacific Imperial Mines 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Imperial Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pacific Imperial showed solid returns over the last few months and may actually be approaching a breakup point.
Rathdowney Resources 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Rathdowney Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rathdowney Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pacific Imperial and Rathdowney Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pacific Imperial and Rathdowney Resources

The main advantage of trading using opposite Pacific Imperial and Rathdowney Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Imperial position performs unexpectedly, Rathdowney 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 Rathdowney Resources will offset losses from the drop in Rathdowney Resources' long position.
The idea behind Pacific Imperial Mines and Rathdowney Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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