Correlation Between Aspire Mining and Caravel Minerals

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

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

Diversification Opportunities for Aspire Mining and Caravel Minerals

-0.42

Correlation Coefficient

Aspire Mining  Caravel Minerals

Very good diversification

The 3 months correlation between Aspire and Caravel is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aspire Mining and Caravel Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravel Minerals and Aspire Mining 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 Aspire Mining are associated (or correlated) with Caravel Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravel Minerals has no effect on the direction of Aspire Mining i.e., Aspire Mining and Caravel Minerals go up and down completely randomly.

Pair Corralation between Aspire Mining and Caravel Minerals

Assuming the 90 days trading horizon Aspire Mining is expected to under-perform the Caravel Minerals. In addition to that, Aspire Mining is 1.66 times more volatile than Caravel Minerals. It trades about -0.06 of its total potential returns per unit of risk. Caravel Minerals is currently generating about -0.09 per unit of volatility. If you would invest  20.00  in Caravel Minerals on October 10, 2024 and sell it today you would lose (1.00) from holding Caravel Minerals or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Aspire Mining  vs.  Caravel Minerals

Aspire Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspire Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Caravel Minerals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caravel Minerals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caravel Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspire Mining and Caravel Minerals

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

The idea behind Aspire Mining and Caravel Minerals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.