Correlation Between Tarku Resources and Group Eleven

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

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

Diversification Opportunities for Tarku Resources and Group Eleven

0.61

Correlation Coefficient

Tarku Resources  Group Eleven

Poor diversification

The 3 months correlation between Tarku and Group is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tarku Resources and Group Eleven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Eleven Resources and Tarku 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 Tarku Resources are associated (or correlated) with Group Eleven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Eleven Resources has no effect on the direction of Tarku Resources i.e., Tarku Resources and Group Eleven go up and down completely randomly.

Pair Corralation between Tarku Resources and Group Eleven

Assuming the 90 days horizon Tarku Resources is expected to generate 5.72 times more return on investment than Group Eleven. However, Tarku Resources is 5.72 times more volatile than Group Eleven Resources. It trades about 0.08 of its potential returns per unit of risk. Group Eleven Resources is currently generating about -0.01 per unit of risk. If you would invest  1.33  in Tarku Resources on September 3, 2024 and sell it today you would lose (0.79) from holding Tarku Resources or give up 59.4% of portfolio value over 90 days.

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

Tarku Resources  vs.  Group Eleven Resources

Tarku Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tarku Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tarku Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Group Eleven Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tarku Resources and Group Eleven

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

The idea behind Tarku Resources and Group Eleven 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.