Correlation Between Tinka Resources and Pegasus Resources

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Can any of the company-specific risk be diversified away by investing in both Tinka Resources and Pegasus 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 Tinka Resources and Pegasus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tinka Resources Limited and Pegasus Resources, you can compare the effects of market volatilities on Tinka Resources and Pegasus 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 Tinka Resources with a short position of Pegasus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinka Resources and Pegasus Resources.

Diversification Opportunities for Tinka Resources and Pegasus Resources

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Tinka and Pegasus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tinka Resources Limited and Pegasus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Resources and Tinka 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 Tinka Resources Limited are associated (or correlated) with Pegasus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Resources has no effect on the direction of Tinka Resources i.e., Tinka Resources and Pegasus Resources go up and down completely randomly.

Pair Corralation between Tinka Resources and Pegasus Resources

Assuming the 90 days horizon Tinka Resources Limited is expected to under-perform the Pegasus Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Tinka Resources Limited is 7.63 times less risky than Pegasus Resources. The otc stock trades about -0.02 of its potential returns per unit of risk. The Pegasus Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Pegasus Resources on September 1, 2024 and sell it today you would lose (4.00) from holding Pegasus Resources or give up 28.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.21%
ValuesDaily Returns

Tinka Resources Limited  vs.  Pegasus Resources

 Performance 
       Timeline  
Tinka Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tinka Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Tinka Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Pegasus Resources 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pegasus Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Pegasus Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Tinka Resources and Pegasus Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tinka Resources and Pegasus Resources

The main advantage of trading using opposite Tinka Resources and Pegasus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tinka Resources position performs unexpectedly, Pegasus 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 Pegasus Resources will offset losses from the drop in Pegasus Resources' long position.
The idea behind Tinka Resources Limited and Pegasus Resources 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.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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