Correlation Between European Residential and Rugby Mining

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

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

Diversification Opportunities for European Residential and Rugby Mining

0.6

Correlation Coefficient

European Residential  Rugby Mining

Poor diversification

The 3 months correlation between European and Rugby is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Rugby Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rugby Mining Limited and European Residential 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 European Residential Real are associated (or correlated) with Rugby Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rugby Mining Limited has no effect on the direction of European Residential i.e., European Residential and Rugby Mining go up and down completely randomly.

Pair Corralation between European Residential and Rugby Mining

Assuming the 90 days trading horizon European Residential Real is expected to generate 0.39 times more return on investment than Rugby Mining. However, European Residential Real is 2.59 times less risky than Rugby Mining. It trades about -0.04 of its potential returns per unit of risk. Rugby Mining Limited is currently generating about -0.04 per unit of risk. If you would invest  305.00  in European Residential Real on October 26, 2024 and sell it today you would lose (67.00) from holding European Residential Real or give up 21.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

European Residential Real  vs.  Rugby Mining Limited

European Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Rugby Mining Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rugby Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with European Residential and Rugby Mining

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

The idea behind European Residential Real and Rugby Mining Limited 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.