Correlation Between Sherritt International and Tinka Resources
Can any of the company-specific risk be diversified away by investing in both Sherritt International 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 Sherritt International and Tinka Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sherritt International and Tinka Resources Limited, you can compare the effects of market volatilities on Sherritt International 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 Sherritt International with a short position of Tinka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherritt International and Tinka Resources.
Diversification Opportunities for Sherritt International and Tinka Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sherritt and Tinka is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sherritt International and Tinka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinka Resources and Sherritt International 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 Sherritt International 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 Sherritt International i.e., Sherritt International and Tinka Resources go up and down completely randomly.
Pair Corralation between Sherritt International and Tinka Resources
Assuming the 90 days horizon Sherritt International is expected to under-perform the Tinka Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sherritt International is 2.7 times less risky than Tinka Resources. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Tinka Resources Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Tinka Resources Limited on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Tinka Resources Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherritt International vs. Tinka Resources Limited
Performance |
| Timeline |
| Sherritt International |
| Tinka Resources |
Sherritt International and Tinka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherritt International and Tinka Resources
The main advantage of trading using opposite Sherritt International and Tinka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherritt International 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.| Sherritt International vs. Metals X Limited | Sherritt International vs. Interra Copper Corp | Sherritt International vs. Anglo American PLC | Sherritt International vs. OM Holdings Limited |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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