Correlation Between Aldebaran Resources and Globex Mining

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

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

Diversification Opportunities for Aldebaran Resources and Globex Mining

0.75

Correlation Coefficient

Aldebaran Resources  Globex Mining

Poor diversification

The 3 months correlation between Aldebaran and Globex is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aldebaran Resources and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and Aldebaran 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 Aldebaran Resources are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Aldebaran Resources i.e., Aldebaran Resources and Globex Mining go up and down completely randomly.

Pair Corralation between Aldebaran Resources and Globex Mining

Assuming the 90 days horizon Aldebaran Resources is expected to generate 2.29 times more return on investment than Globex Mining. However, Aldebaran Resources is 2.29 times more volatile than Globex Mining Enterprises. It trades about 0.23 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.2 per unit of risk. If you would invest  69.00  in Aldebaran Resources on September 12, 2024 and sell it today you would earn a total of  62.00  from holding Aldebaran Resources or generate 89.86% return on investment over 90 days.

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

Aldebaran Resources  vs.  Globex Mining Enterprises

Aldebaran Resources

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aldebaran Resources are ranked lower than 18 (%) 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.

Globex Mining Enterprises

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Globex Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aldebaran Resources and Globex Mining

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

The idea behind Aldebaran Resources and Globex Mining Enterprises 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.