Correlation Between Talisman Mining and Aurum Resources
Can any of the company-specific risk be diversified away by investing in both Talisman Mining and Aurum 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 Talisman Mining and Aurum Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talisman Mining and Aurum Resources, you can compare the effects of market volatilities on Talisman Mining and Aurum 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 Talisman Mining with a short position of Aurum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talisman Mining and Aurum Resources.
Diversification Opportunities for Talisman Mining and Aurum Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Talisman and Aurum is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Talisman Mining and Aurum Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurum Resources and Talisman Mining 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 Talisman Mining are associated (or correlated) with Aurum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurum Resources has no effect on the direction of Talisman Mining i.e., Talisman Mining and Aurum Resources go up and down completely randomly.
Pair Corralation between Talisman Mining and Aurum Resources
Assuming the 90 days trading horizon Talisman Mining is expected to generate 1.0 times more return on investment than Aurum Resources. However, Talisman Mining is 1.0 times more volatile than Aurum Resources. It trades about 0.1 of its potential returns per unit of risk. Aurum Resources is currently generating about -0.14 per unit of risk. If you would invest 22.00 in Talisman Mining on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Talisman Mining or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talisman Mining vs. Aurum Resources
Performance |
| Timeline |
| Talisman Mining |
| Aurum Resources |
Talisman Mining and Aurum Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talisman Mining and Aurum Resources
The main advantage of trading using opposite Talisman Mining and Aurum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talisman Mining position performs unexpectedly, Aurum 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 Aurum Resources will offset losses from the drop in Aurum Resources' long position.| Talisman Mining vs. Northern Star Resources | Talisman Mining vs. Evolution Mining | Talisman Mining vs. Bluescope Steel | Talisman Mining vs. Sandfire Resources NL |
| Aurum Resources vs. Premier Investments | Aurum Resources vs. Diversified United Investment | Aurum Resources vs. Auctus Alternative Investments | Aurum Resources vs. ARN Media 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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