Correlation Between Resource Base and Health
Can any of the company-specific risk be diversified away by investing in both Resource Base and Health 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 Resource Base and Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource Base and Health and Plant, you can compare the effects of market volatilities on Resource Base and Health 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 Resource Base with a short position of Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Base and Health.
Diversification Opportunities for Resource Base and Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Resource and Health is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Resource Base and Health and Plant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health and Plant and Resource Base 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 Resource Base are associated (or correlated) with Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health and Plant has no effect on the direction of Resource Base i.e., Resource Base and Health go up and down completely randomly.
Pair Corralation between Resource Base and Health
Assuming the 90 days trading horizon Resource Base is expected to generate 2.86 times more return on investment than Health. However, Resource Base is 2.86 times more volatile than Health and Plant. It trades about 0.0 of its potential returns per unit of risk. Health and Plant is currently generating about -0.05 per unit of risk. If you would invest 8.50 in Resource Base on September 12, 2024 and sell it today you would lose (4.80) from holding Resource Base or give up 56.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resource Base vs. Health and Plant
Performance |
| Timeline |
| Resource Base |
| Health and Plant |
Resource Base and Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resource Base and Health
The main advantage of trading using opposite Resource Base and Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource Base position performs unexpectedly, Health 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 Health will offset losses from the drop in Health's long position.| Resource Base vs. Northern Star Resources | Resource Base vs. Evolution Mining | Resource Base vs. Bluescope Steel | Resource Base vs. Sandfire Resources NL |
| Health vs. Pinnacle Investment Management | Health vs. Argo Investments | Health vs. Group 6 Metals | Health vs. Mirrabooka Investments |
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.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges |