Correlation Between Aclara Resources and Parex Resources

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

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

Diversification Opportunities for Aclara Resources and Parex Resources

-0.1

Correlation Coefficient

Aclara Resources  Parex Resources

Good diversification

The 3 months correlation between Aclara and Parex is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aclara Resources and Parex Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parex Resources and Aclara 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 Aclara Resources are associated (or correlated) with Parex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parex Resources has no effect on the direction of Aclara Resources i.e., Aclara Resources and Parex Resources go up and down completely randomly.

Pair Corralation between Aclara Resources and Parex Resources

Assuming the 90 days trading horizon Aclara Resources is expected to generate 1.84 times more return on investment than Parex Resources. However, Aclara Resources is 1.84 times more volatile than Parex Resources. It trades about 0.07 of its potential returns per unit of risk. Parex Resources is currently generating about 0.02 per unit of risk. If you would invest  46.00  in Aclara Resources on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Aclara Resources or generate 13.04% return on investment over 90 days.

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

Aclara Resources  vs.  Parex Resources

Aclara Resources

Risk-Adjusted Performance

Modest

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

Parex Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parex Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Parex Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aclara Resources and Parex Resources

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

The idea behind Aclara Resources and Parex 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..