Correlation Between Sarama Resources and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both Sarama Resources and Mayfield Childcare 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 Sarama Resources and Mayfield Childcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarama Resources and Mayfield Childcare, you can compare the effects of market volatilities on Sarama Resources and Mayfield Childcare 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 Sarama Resources with a short position of Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarama Resources and Mayfield Childcare.
Diversification Opportunities for Sarama Resources and Mayfield Childcare
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sarama and Mayfield is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sarama Resources and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare and Sarama Resources 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 Sarama Resources are associated (or correlated) with Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of Sarama Resources i.e., Sarama Resources and Mayfield Childcare go up and down completely randomly.
Pair Corralation between Sarama Resources and Mayfield Childcare
Assuming the 90 days trading horizon Sarama Resources is expected to generate 2.57 times more return on investment than Mayfield Childcare. However, Sarama Resources is 2.57 times more volatile than Mayfield Childcare. It trades about -0.01 of its potential returns per unit of risk. Mayfield Childcare is currently generating about -0.06 per unit of risk. If you would invest 8.00 in Sarama Resources on September 12, 2024 and sell it today you would lose (5.00) from holding Sarama Resources or give up 62.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Sarama Resources vs. Mayfield Childcare
Performance |
| Timeline |
| Sarama Resources |
| Mayfield Childcare |
Sarama Resources and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarama Resources and Mayfield Childcare
The main advantage of trading using opposite Sarama Resources and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarama Resources position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| Sarama Resources vs. Navigator Global Investments | Sarama Resources vs. Retail Food Group | Sarama Resources vs. Carlton Investments | Sarama Resources vs. Aspire Mining |
| Mayfield Childcare vs. Aneka Tambang Tbk | Mayfield Childcare vs. BHP Group Limited | Mayfield Childcare vs. Commonwealth Bank | Mayfield Childcare vs. Commonwealth Bank of |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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