Correlation Between Signature Resources and Rugby Mining

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

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

Diversification Opportunities for Signature Resources and Rugby Mining

0.55

Correlation Coefficient

Signature Resources  Rugby Mining

Very weak diversification

The 3 months correlation between Signature and Rugby is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Signature Resources and Rugby Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rugby Mining Limited and Signature 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 Signature Resources are associated (or correlated) with Rugby Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rugby Mining Limited has no effect on the direction of Signature Resources i.e., Signature Resources and Rugby Mining go up and down completely randomly.

Pair Corralation between Signature Resources and Rugby Mining

Assuming the 90 days horizon Signature Resources is expected to under-perform the Rugby Mining. But the stock apears to be less risky and, when comparing its historical volatility, Signature Resources is 1.0 times less risky than Rugby Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Rugby Mining Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Rugby Mining Limited on September 23, 2024 and sell it today you would lose (2.00) from holding Rugby Mining Limited or give up 50.0% of portfolio value over 90 days.

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

Signature Resources  vs.  Rugby Mining Limited

Signature Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signature Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Rugby Mining Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rugby Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Signature Resources and Rugby Mining

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

The idea behind Signature Resources and Rugby Mining Limited 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 Stocks Directory module to find actively traded stocks across global markets.