Correlation Between Newcrest Mining and Rupert Resources

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

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

Diversification Opportunities for Newcrest Mining and Rupert Resources

-0.5

Correlation Coefficient

Newcrest Mining  Rupert Resources

Very good diversification

The 3 months correlation between Newcrest and Rupert is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Newcrest Mining and Rupert Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rupert Resources and Newcrest 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 Newcrest Mining are associated (or correlated) with Rupert Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rupert Resources has no effect on the direction of Newcrest Mining i.e., Newcrest Mining and Rupert Resources go up and down completely randomly.

Pair Corralation between Newcrest Mining and Rupert Resources

If you would invest  286.00  in Rupert Resources on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Rupert Resources or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Newcrest Mining  vs.  Rupert Resources

Newcrest Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rupert Resources

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Newcrest Mining and Rupert Resources

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

The idea behind Newcrest Mining and Rupert 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.