Correlation Between Rio Tinto and Sassy Resources
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Sassy 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 Rio Tinto and Sassy Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto Group and Sassy Resources, you can compare the effects of market volatilities on Rio Tinto and Sassy 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 Rio Tinto with a short position of Sassy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Sassy Resources.
Diversification Opportunities for Rio Tinto and Sassy Resources
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rio and Sassy is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto Group and Sassy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sassy Resources and Rio Tinto 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 Rio Tinto Group are associated (or correlated) with Sassy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sassy Resources has no effect on the direction of Rio Tinto i.e., Rio Tinto and Sassy Resources go up and down completely randomly.
Pair Corralation between Rio Tinto and Sassy Resources
Assuming the 90 days horizon Rio Tinto is expected to generate 30.85 times less return on investment than Sassy Resources. But when comparing it to its historical volatility, Rio Tinto Group is 7.94 times less risky than Sassy Resources. It trades about 0.02 of its potential returns per unit of risk. Sassy Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Sassy Resources on August 25, 2024 and sell it today you would lose (7.00) from holding Sassy Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.6% |
| Values | Daily Returns |
Rio Tinto Group vs. Sassy Resources
Performance |
| Timeline |
| Rio Tinto Group |
| Sassy Resources |
Rio Tinto and Sassy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Sassy Resources
The main advantage of trading using opposite Rio Tinto and Sassy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Sassy 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 Sassy Resources will offset losses from the drop in Sassy Resources' long position.| Rio Tinto vs. Silver Dollar Resources | Rio Tinto vs. BHP Group Limited | Rio Tinto vs. Doubleview Gold Corp | Rio Tinto vs. Anglo American plc |
| Sassy Resources vs. Norra Metals Corp | Sassy Resources vs. ZincX Resources Corp | Sassy Resources vs. Nuinsco Resources Limited | Sassy Resources vs. South Star Battery |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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