Correlation Between Sun Summit and RTG Mining
Can any of the company-specific risk be diversified away by investing in both Sun Summit and RTG 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 Sun Summit and RTG Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Summit Minerals and RTG Mining, you can compare the effects of market volatilities on Sun Summit and RTG 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 Sun Summit with a short position of RTG Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Summit and RTG Mining.
Diversification Opportunities for Sun Summit and RTG Mining
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sun and RTG is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sun Summit Minerals and RTG Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTG Mining and Sun Summit 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 Sun Summit Minerals are associated (or correlated) with RTG Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTG Mining has no effect on the direction of Sun Summit i.e., Sun Summit and RTG Mining go up and down completely randomly.
Pair Corralation between Sun Summit and RTG Mining
Assuming the 90 days horizon Sun Summit Minerals is expected to under-perform the RTG Mining. But the stock apears to be less risky and, when comparing its historical volatility, Sun Summit Minerals is 1.95 times less risky than RTG Mining. The stock trades about -0.28 of its potential returns per unit of risk. The RTG Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4.00 in RTG Mining on August 26, 2024 and sell it today you would lose (1.00) from holding RTG Mining or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Summit Minerals vs. RTG Mining
Performance |
| Timeline |
| Sun Summit Minerals |
| RTG Mining |
Sun Summit and RTG Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Summit and RTG Mining
The main advantage of trading using opposite Sun Summit and RTG Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Summit position performs unexpectedly, RTG 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 RTG Mining will offset losses from the drop in RTG Mining's long position.The idea behind Sun Summit Minerals and RTG Mining 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.| RTG Mining vs. Capstone Mining Corp | RTG Mining vs. Plaza Retail REIT | RTG Mining vs. Xtract One Technologies | RTG Mining vs. Monument Mining Limited |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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