Correlation Between Truscott Mining and PM Capital
Can any of the company-specific risk be diversified away by investing in both Truscott Mining and PM Capital 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 Truscott Mining and PM Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truscott Mining Corp and PM Capital Global, you can compare the effects of market volatilities on Truscott Mining and PM Capital 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 Truscott Mining with a short position of PM Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truscott Mining and PM Capital.
Diversification Opportunities for Truscott Mining and PM Capital
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Truscott and PGF is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Truscott Mining Corp and PM Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PM Capital Global and Truscott 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 Truscott Mining Corp are associated (or correlated) with PM Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PM Capital Global has no effect on the direction of Truscott Mining i.e., Truscott Mining and PM Capital go up and down completely randomly.
Pair Corralation between Truscott Mining and PM Capital
Assuming the 90 days trading horizon Truscott Mining Corp is expected to generate 5.79 times more return on investment than PM Capital. However, Truscott Mining is 5.79 times more volatile than PM Capital Global. It trades about 0.01 of its potential returns per unit of risk. PM Capital Global is currently generating about -0.09 per unit of risk. If you would invest 7.80 in Truscott Mining Corp on September 1, 2024 and sell it today you would lose (0.30) from holding Truscott Mining Corp or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Truscott Mining Corp vs. PM Capital Global
Performance |
| Timeline |
| Truscott Mining Corp |
| PM Capital Global |
Truscott Mining and PM Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truscott Mining and PM Capital
The main advantage of trading using opposite Truscott Mining and PM Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truscott Mining position performs unexpectedly, PM Capital 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 PM Capital will offset losses from the drop in PM Capital's long position.| Truscott Mining vs. Northern Star Resources | Truscott Mining vs. Evolution Mining | Truscott Mining vs. Bluescope Steel | Truscott Mining vs. Sandfire Resources NL |
| PM Capital vs. Skycity Entertainment Group | PM Capital vs. Retail Food Group | PM Capital vs. Truscott Mining Corp | PM Capital vs. Autosports Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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