Correlation Between Elray Resources and Royal Wins

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

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

Diversification Opportunities for Elray Resources and Royal Wins

0.0

Correlation Coefficient

Elray Resources  Royal Wins

Pay attention - limited upside

The 3 months correlation between Elray and Royal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elray Resources and Royal Wins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Wins and Elray 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 Elray Resources are associated (or correlated) with Royal Wins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Wins has no effect on the direction of Elray Resources i.e., Elray Resources and Royal Wins go up and down completely randomly.

Pair Corralation between Elray Resources and Royal Wins

If you would invest  0.05  in Elray Resources on September 19, 2024 and sell it today you would lose (0.01) from holding Elray Resources or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Elray Resources  vs.  Royal Wins

Elray Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elray Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Elray Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Royal Wins

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elray Resources and Royal Wins

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

The idea behind Elray Resources and Royal Wins 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.