Correlation Between Balkan Mining and Native Mineral

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

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

Diversification Opportunities for Balkan Mining and Native Mineral

-0.48

Correlation Coefficient

Balkan Mining  Native Mineral

Very good diversification

The 3 months correlation between Balkan and Native is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Balkan Mining and and Native Mineral Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Native Mineral Resources and Balkan 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 Balkan Mining and are associated (or correlated) with Native Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Native Mineral Resources has no effect on the direction of Balkan Mining i.e., Balkan Mining and Native Mineral go up and down completely randomly.

Pair Corralation between Balkan Mining and Native Mineral

Assuming the 90 days trading horizon Balkan Mining and is expected to under-perform the Native Mineral. But the stock apears to be less risky and, when comparing its historical volatility, Balkan Mining and is 1.36 times less risky than Native Mineral. The stock trades about -0.03 of its potential returns per unit of risk. The Native Mineral Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9.70  in Native Mineral Resources on October 7, 2024 and sell it today you would lose (5.70) from holding Native Mineral Resources or give up 58.76% of portfolio value over 90 days.

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

Balkan Mining and  vs.  Native Mineral Resources

Balkan Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balkan Mining and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Balkan Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Native Mineral Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Native Mineral Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Native Mineral unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Balkan Mining and Native Mineral

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

The idea behind Balkan Mining and and Native Mineral 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.