Correlation Between Red Moon and Tinka Resources
Can any of the company-specific risk be diversified away by investing in both Red Moon and Tinka 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 Red Moon and Tinka Resources 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 Tinka Resources Limited, you can compare the effects of market volatilities on Red Moon and Tinka 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 Red Moon with a short position of Tinka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Tinka Resources.
Diversification Opportunities for Red Moon and Tinka Resources
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Tinka is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Tinka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinka Resources 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 Tinka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinka Resources has no effect on the direction of Red Moon i.e., Red Moon and Tinka Resources go up and down completely randomly.
Pair Corralation between Red Moon and Tinka Resources
Assuming the 90 days horizon Red Moon Resources is expected to generate 0.61 times more return on investment than Tinka Resources. However, Red Moon Resources is 1.64 times less risky than Tinka Resources. It trades about 0.01 of its potential returns per unit of risk. Tinka Resources Limited is currently generating about -0.02 per unit of risk. If you would invest 46.00 in Red Moon Resources on September 1, 2024 and sell it today you would lose (2.00) from holding Red Moon Resources or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Moon Resources vs. Tinka Resources Limited
Performance |
| Timeline |
| Red Moon Resources |
| Tinka Resources |
Red Moon and Tinka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Tinka Resources
The main advantage of trading using opposite Red Moon and Tinka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon position performs unexpectedly, Tinka 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 Tinka Resources will offset losses from the drop in Tinka Resources' long position.The idea behind Red Moon Resources and Tinka Resources Limited 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.| Tinka Resources vs. Pampa Metals | Tinka Resources vs. Progressive Planet Solutions | Tinka Resources vs. Searchlight Resources | Tinka Resources vs. Durango Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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