Correlation Between Astar and Talga Resources

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

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

Diversification Opportunities for Astar and Talga Resources

0.15

Correlation Coefficient

Astar  Talga Resources

Average diversification

The 3 months correlation between Astar and Talga is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Talga Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talga Resources and Astar 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 Astar are associated (or correlated) with Talga Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talga Resources has no effect on the direction of Astar i.e., Astar and Talga Resources go up and down completely randomly.

Pair Corralation between Astar and Talga Resources

Assuming the 90 days trading horizon Astar is expected to under-perform the Talga Resources. In addition to that, Astar is 1.67 times more volatile than Talga Resources. It trades about -0.08 of its total potential returns per unit of risk. Talga Resources is currently generating about -0.09 per unit of volatility. If you would invest  45.00  in Talga Resources on October 10, 2024 and sell it today you would lose (3.00) from holding Talga Resources or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Astar  vs.  Talga Resources

Astar

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Talga Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talga Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Talga Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and Talga Resources

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

The idea behind Astar and Talga 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.