Correlation Between Big Ridge and Radisson Mining

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

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

Diversification Opportunities for Big Ridge and Radisson Mining

0.47

Correlation Coefficient

Big Ridge  Radisson Mining

Very weak diversification

The 3 months correlation between Big and Radisson is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Radisson Mining Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radisson Mining Resources and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Radisson Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radisson Mining Resources has no effect on the direction of Big Ridge i.e., Big Ridge and Radisson Mining go up and down completely randomly.

Pair Corralation between Big Ridge and Radisson Mining

Assuming the 90 days horizon Big Ridge Gold is expected to under-perform the Radisson Mining. In addition to that, Big Ridge is 1.83 times more volatile than Radisson Mining Resources. It trades about -0.01 of its total potential returns per unit of risk. Radisson Mining Resources is currently generating about 0.02 per unit of volatility. If you would invest  23.00  in Radisson Mining Resources on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Radisson Mining Resources or generate 0.0% return on investment over 90 days.

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

Big Ridge Gold  vs.  Radisson Mining Resources

Big Ridge Gold

Risk-Adjusted Performance

Very Weak

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

Radisson Mining Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Radisson Mining Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Radisson Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Big Ridge and Radisson Mining

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

The idea behind Big Ridge Gold and Radisson Mining 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.