Correlation Between Environmental and Rand Mining

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

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

Diversification Opportunities for Environmental and Rand Mining

0.55

Correlation Coefficient

Environmental  Rand Mining

Very weak diversification

The 3 months correlation between Environmental and Rand is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Environmental Group and Rand Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Mining and Environmental 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 The Environmental Group are associated (or correlated) with Rand Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Mining has no effect on the direction of Environmental i.e., Environmental and Rand Mining go up and down completely randomly.

Pair Corralation between Environmental and Rand Mining

Assuming the 90 days trading horizon The Environmental Group is expected to under-perform the Rand Mining. In addition to that, Environmental is 1.33 times more volatile than Rand Mining. It trades about -0.13 of its total potential returns per unit of risk. Rand Mining is currently generating about -0.12 per unit of volatility. If you would invest  190.00  in Rand Mining on October 11, 2024 and sell it today you would lose (37.00) from holding Rand Mining or give up 19.47% of portfolio value over 90 days.

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

The Environmental Group  vs.  Rand Mining

The Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Environmental Group 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 essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rand Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rand Mining 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Environmental and Rand Mining

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

The idea behind The Environmental Group and Rand Mining 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.