Correlation Between ACDC Metals and Rand Mining
Can any of the company-specific risk be diversified away by investing in both ACDC Metals and Rand 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 ACDC Metals and Rand Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACDC Metals and Rand Mining, you can compare the effects of market volatilities on ACDC Metals and Rand 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 ACDC Metals with a short position of Rand Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Rand Mining.
Diversification Opportunities for ACDC Metals and Rand Mining
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACDC and Rand is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Rand Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Mining and ACDC Metals 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 ACDC Metals are associated (or correlated) with Rand Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Mining has no effect on the direction of ACDC Metals i.e., ACDC Metals and Rand Mining go up and down completely randomly.
Pair Corralation between ACDC Metals and Rand Mining
Assuming the 90 days trading horizon ACDC Metals is expected to generate 1.55 times more return on investment than Rand Mining. However, ACDC Metals is 1.55 times more volatile than Rand Mining. It trades about -0.09 of its potential returns per unit of risk. Rand Mining is currently generating about -0.19 per unit of risk. If you would invest 6.80 in ACDC Metals on October 6, 2024 and sell it today you would lose (1.30) from holding ACDC Metals or give up 19.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ACDC Metals vs. Rand Mining
Performance |
Timeline |
ACDC Metals |
Rand Mining |
ACDC Metals and Rand Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ACDC Metals and Rand Mining
The main advantage of trading using opposite ACDC Metals and Rand Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals position performs unexpectedly, Rand 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 Rand Mining will offset losses from the drop in Rand Mining's long position.ACDC Metals vs. Embark Education Group | ACDC Metals vs. Saferoads Holdings | ACDC Metals vs. Collins Foods | ACDC Metals vs. Charter Hall Education |
Rand Mining vs. TPG Telecom | Rand Mining vs. Star Entertainment Group | Rand Mining vs. Argo Investments | Rand Mining vs. Garda Diversified Ppty |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |