Correlation Between South Star and Searchlight Resources
Can any of the company-specific risk be diversified away by investing in both South Star and Searchlight 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 South Star and Searchlight Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Star Battery and Searchlight Resources, you can compare the effects of market volatilities on South Star and Searchlight 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 South Star with a short position of Searchlight Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Star and Searchlight Resources.
Diversification Opportunities for South Star and Searchlight Resources
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between South and Searchlight is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding South Star Battery and Searchlight Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Resources and South Star 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 South Star Battery are associated (or correlated) with Searchlight Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Resources has no effect on the direction of South Star i.e., South Star and Searchlight Resources go up and down completely randomly.
Pair Corralation between South Star and Searchlight Resources
Assuming the 90 days horizon South Star Battery is expected to generate 0.43 times more return on investment than Searchlight Resources. However, South Star Battery is 2.3 times less risky than Searchlight Resources. It trades about 0.0 of its potential returns per unit of risk. Searchlight Resources is currently generating about 0.0 per unit of risk. If you would invest 51.00 in South Star Battery on August 29, 2024 and sell it today you would lose (12.00) from holding South Star Battery or give up 23.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.35% |
| Values | Daily Returns |
South Star Battery vs. Searchlight Resources
Performance |
| Timeline |
| South Star Battery |
| Searchlight Resources |
South Star and Searchlight Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Star and Searchlight Resources
The main advantage of trading using opposite South Star and Searchlight Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Star position performs unexpectedly, Searchlight 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 Searchlight Resources will offset losses from the drop in Searchlight Resources' long position.| South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Qubec Nickel Corp | South Star vs. Rockridge Resources |
| Searchlight Resources vs. Pampa Metals | Searchlight Resources vs. Progressive Planet Solutions | Searchlight Resources vs. Durango Resources | Searchlight Resources vs. Avarone Metals |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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