Correlation Between Mineral Res and Aldebaran Resources

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

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

Diversification Opportunities for Mineral Res and Aldebaran Resources

-0.6

Correlation Coefficient

Mineral Res  Aldebaran Resources

Excellent diversification

The 3 months correlation between Mineral and Aldebaran is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mineral Res and Aldebaran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldebaran Resources and Mineral Res 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 Mineral Res are associated (or correlated) with Aldebaran Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldebaran Resources has no effect on the direction of Mineral Res i.e., Mineral Res and Aldebaran Resources go up and down completely randomly.

Pair Corralation between Mineral Res and Aldebaran Resources

Assuming the 90 days horizon Mineral Res is expected to generate 41.73 times less return on investment than Aldebaran Resources. In addition to that, Mineral Res is 1.07 times more volatile than Aldebaran Resources. It trades about 0.0 of its total potential returns per unit of risk. Aldebaran Resources is currently generating about 0.2 per unit of volatility. If you would invest  74.00  in Aldebaran Resources on September 14, 2024 and sell it today you would earn a total of  53.00  from holding Aldebaran Resources or generate 71.62% return on investment over 90 days.

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

Mineral Res  vs.  Aldebaran Resources

Mineral Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mineral Res has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Mineral Res is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aldebaran Resources

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aldebaran Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aldebaran Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mineral Res and Aldebaran Resources

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

The idea behind Mineral Res and Aldebaran 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.