Correlation Between Stroud Resources and Trigon Metals

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Can any of the company-specific risk be diversified away by investing in both Stroud Resources and Trigon Metals 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 Stroud Resources and Trigon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stroud Resources and Trigon Metals, you can compare the effects of market volatilities on Stroud Resources and Trigon Metals 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 Stroud Resources with a short position of Trigon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stroud Resources and Trigon Metals.

Diversification Opportunities for Stroud Resources and Trigon Metals

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Stroud and Trigon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Stroud Resources and Trigon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trigon Metals and Stroud 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 Stroud Resources are associated (or correlated) with Trigon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trigon Metals has no effect on the direction of Stroud Resources i.e., Stroud Resources and Trigon Metals go up and down completely randomly.

Pair Corralation between Stroud Resources and Trigon Metals

Assuming the 90 days horizon Stroud Resources is expected to generate 2.91 times more return on investment than Trigon Metals. However, Stroud Resources is 2.91 times more volatile than Trigon Metals. It trades about 0.05 of its potential returns per unit of risk. Trigon Metals is currently generating about -0.02 per unit of risk. If you would invest  19.00  in Stroud Resources on September 6, 2024 and sell it today you would lose (13.00) from holding Stroud Resources or give up 68.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Stroud Resources  vs.  Trigon Metals

 Performance 
       Timeline  
Stroud Resources 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Stroud Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Stroud Resources showed solid returns over the last few months and may actually be approaching a breakup point.
Trigon Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Trigon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Trigon Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stroud Resources and Trigon Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stroud Resources and Trigon Metals

The main advantage of trading using opposite Stroud Resources and Trigon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stroud Resources position performs unexpectedly, Trigon Metals 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 Trigon Metals will offset losses from the drop in Trigon Metals' long position.
The idea behind Stroud Resources and Trigon Metals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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