Correlation Between Duketon Mining and EROAD

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

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

Diversification Opportunities for Duketon Mining and EROAD

0.44

Correlation Coefficient

Duketon Mining  EROAD

Very weak diversification

The 3 months correlation between Duketon and EROAD is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Duketon Mining and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Duketon 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 Duketon Mining are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Duketon Mining i.e., Duketon Mining and EROAD go up and down completely randomly.

Pair Corralation between Duketon Mining and EROAD

Assuming the 90 days trading horizon Duketon Mining is expected to under-perform the EROAD. But the stock apears to be less risky and, when comparing its historical volatility, Duketon Mining is 1.06 times less risky than EROAD. The stock trades about -0.04 of its potential returns per unit of risk. The EROAD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  70.00  in EROAD on September 20, 2024 and sell it today you would earn a total of  23.00  from holding EROAD or generate 32.86% return on investment over 90 days.

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

Duketon Mining  vs.  EROAD

Duketon Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duketon Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Duketon Mining and EROAD

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

The idea behind Duketon Mining and EROAD 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.