Correlation Between Tinka Resources and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Tinka Resources and Sumitomo Metal 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 Sumitomo Metal 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 Sumitomo Metal Mining, you can compare the effects of market volatilities on Tinka Resources and Sumitomo Metal 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 Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tinka Resources and Sumitomo Metal.
Diversification Opportunities for Tinka Resources and Sumitomo Metal
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tinka and Sumitomo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tinka Resources Limited and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining 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 Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of Tinka Resources i.e., Tinka Resources and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Tinka Resources and Sumitomo Metal
Assuming the 90 days horizon Tinka Resources Limited is expected to generate 3.09 times more return on investment than Sumitomo Metal. However, Tinka Resources is 3.09 times more volatile than Sumitomo Metal Mining. It trades about -0.02 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.06 per unit of risk. If you would invest 10.00 in Tinka Resources Limited on September 1, 2024 and sell it today you would lose (3.00) from holding Tinka Resources Limited or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Tinka Resources Limited vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Tinka Resources |
| Sumitomo Metal Mining |
Tinka Resources and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tinka Resources and Sumitomo Metal
The main advantage of trading using opposite Tinka Resources and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tinka Resources position performs unexpectedly, Sumitomo Metal 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 Sumitomo Metal will offset losses from the drop in Sumitomo Metal's long position.| Tinka Resources vs. Pampa Metals | Tinka Resources vs. Progressive Planet Solutions | Tinka Resources vs. Searchlight Resources | Tinka Resources vs. Durango Resources |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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