Correlation Between Red Moon and Chalice Mining
Can any of the company-specific risk be diversified away by investing in both Red Moon and Chalice Mining 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 Red Moon and Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Moon Resources and Chalice Mining Limited, you can compare the effects of market volatilities on Red Moon and Chalice Mining 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 Red Moon with a short position of Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Chalice Mining.
Diversification Opportunities for Red Moon and Chalice Mining
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and Chalice is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and Red Moon 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 Red Moon Resources are associated (or correlated) with Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Red Moon i.e., Red Moon and Chalice Mining go up and down completely randomly.
Pair Corralation between Red Moon and Chalice Mining
Assuming the 90 days horizon Red Moon Resources is expected to generate 0.81 times more return on investment than Chalice Mining. However, Red Moon Resources is 1.24 times less risky than Chalice Mining. It trades about -0.03 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.03 per unit of risk. If you would invest 125.00 in Red Moon Resources on August 30, 2024 and sell it today you would lose (81.00) from holding Red Moon Resources or give up 64.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Moon Resources vs. Chalice Mining Limited
Performance |
| Timeline |
| Red Moon Resources |
| Chalice Mining |
Red Moon and Chalice Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Chalice Mining
The main advantage of trading using opposite Red Moon and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon position performs unexpectedly, Chalice Mining 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.| Red Moon vs. Aurwest Resources | Red Moon vs. Benton Resources | Red Moon vs. Pan Global Resources | Red Moon vs. Tower Resources |
| Chalice Mining vs. Pegasus Resources | Chalice Mining vs. Niobay Metals | Chalice Mining vs. Freegold Ventures Limited | Chalice Mining vs. Wallbridge Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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