Correlation Between Decade Resources and Core Assets

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

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

Diversification Opportunities for Decade Resources and Core Assets

0.1

Correlation Coefficient

Decade Resources  Core Assets

Average diversification

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

Pair Corralation between Decade Resources and Core Assets

Assuming the 90 days horizon Decade Resources is expected to generate 2.12 times more return on investment than Core Assets. However, Decade Resources is 2.12 times more volatile than Core Assets Corp. It trades about 0.11 of its potential returns per unit of risk. Core Assets Corp is currently generating about 0.04 per unit of risk. If you would invest  1.58  in Decade Resources on December 28, 2024 and sell it today you would earn a total of  0.89  from holding Decade Resources or generate 56.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Decade Resources  vs.  Core Assets Corp

Decade Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Decade Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Decade Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Core Assets Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Core Assets Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Core Assets reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Decade Resources and Core Assets

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

The idea behind Decade Resources and Core Assets Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.