Correlation Between Balkan Mining and WA1 Resources

Can any of the company-specific risk be diversified away by investing in both Balkan Mining and WA1 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 Balkan Mining and WA1 Resources 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 WA1 Resources, you can compare the effects of market volatilities on Balkan Mining and WA1 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 Balkan Mining with a short position of WA1 Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balkan Mining and WA1 Resources.

Diversification Opportunities for Balkan Mining and WA1 Resources

0.04

Correlation Coefficient

Balkan Mining  WA1 Resources

Significant diversification

The 3 months correlation between Balkan and WA1 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Balkan Mining and and WA1 Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WA1 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 WA1 Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WA1 Resources has no effect on the direction of Balkan Mining i.e., Balkan Mining and WA1 Resources go up and down completely randomly.

Pair Corralation between Balkan Mining and WA1 Resources

Assuming the 90 days trading horizon Balkan Mining and is expected to under-perform the WA1 Resources. In addition to that, Balkan Mining is 1.03 times more volatile than WA1 Resources. It trades about -0.18 of its total potential returns per unit of risk. WA1 Resources is currently generating about 0.06 per unit of volatility. If you would invest  1,386  in WA1 Resources on October 9, 2024 and sell it today you would earn a total of  51.00  from holding WA1 Resources or generate 3.68% return on investment over 90 days.

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

Balkan Mining and  vs.  WA1 Resources

Balkan Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Balkan Mining and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

WA1 Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WA1 Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WA1 Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Balkan Mining and WA1 Resources

The main advantage of trading using opposite Balkan Mining and WA1 Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balkan Mining position performs unexpectedly, WA1 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 WA1 Resources will offset losses from the drop in WA1 Resources' long position.

The idea behind Balkan Mining and and WA1 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.