Correlation Between Ecofibre and NEWMONT PORATION

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

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

Diversification Opportunities for Ecofibre and NEWMONT PORATION

-0.22

Correlation Coefficient

Ecofibre  NEWMONT PORATION

Very good diversification

The 3 months correlation between Ecofibre and NEWMONT is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and NEWMONT PORATION CDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWMONT PORATION CDI and Ecofibre 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 Ecofibre are associated (or correlated) with NEWMONT PORATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWMONT PORATION CDI has no effect on the direction of Ecofibre i.e., Ecofibre and NEWMONT PORATION go up and down completely randomly.

Pair Corralation between Ecofibre and NEWMONT PORATION

Assuming the 90 days trading horizon Ecofibre is expected to generate 2.87 times more return on investment than NEWMONT PORATION. However, Ecofibre is 2.87 times more volatile than NEWMONT PORATION CDI. It trades about 0.04 of its potential returns per unit of risk. NEWMONT PORATION CDI is currently generating about -0.11 per unit of risk. If you would invest  2.90  in Ecofibre on September 14, 2024 and sell it today you would earn a total of  0.10  from holding Ecofibre or generate 3.45% return on investment over 90 days.

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

Ecofibre  vs.  NEWMONT PORATION CDI

Ecofibre

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ecofibre are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Ecofibre unveiled solid returns over the last few months and may actually be approaching a breakup point.

NEWMONT PORATION CDI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEWMONT PORATION CDI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ecofibre and NEWMONT PORATION

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

The idea behind Ecofibre and NEWMONT PORATION CDI 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.