Correlation Between Computershare and Minbos Resources

Can any of the company-specific risk be diversified away by investing in both Computershare and Minbos 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 Computershare and Minbos Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Computershare and Minbos Resources, you can compare the effects of market volatilities on Computershare and Minbos 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 Computershare with a short position of Minbos Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computershare and Minbos Resources.

Diversification Opportunities for Computershare and Minbos Resources

0.68

Correlation Coefficient

Computershare  Minbos Resources

Poor diversification

The 3 months correlation between Computershare and Minbos is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Computershare and Minbos Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minbos Resources and Computershare 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 Computershare are associated (or correlated) with Minbos Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minbos Resources has no effect on the direction of Computershare i.e., Computershare and Minbos Resources go up and down completely randomly.

Pair Corralation between Computershare and Minbos Resources

Assuming the 90 days trading horizon Computershare is expected to generate 2.43 times less return on investment than Minbos Resources. But when comparing it to its historical volatility, Computershare is 4.38 times less risky than Minbos Resources. It trades about 0.19 of its potential returns per unit of risk. Minbos Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6.40  in Minbos Resources on September 12, 2024 and sell it today you would earn a total of  2.40  from holding Minbos Resources or generate 37.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Computershare  vs.  Minbos Resources

Computershare

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Computershare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Minbos Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minbos Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Minbos Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computershare and Minbos Resources

The main advantage of trading using opposite Computershare and Minbos Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computershare position performs unexpectedly, Minbos 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 Minbos Resources will offset losses from the drop in Minbos Resources' long position.

The idea behind Computershare and Minbos 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.