Correlation Between Flinders Resources and Pacific Bay

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

By analyzing existing cross correlation between Flinders Resources Limited and Pacific Bay Minerals, you can compare the effects of market volatilities on Flinders Resources and Pacific Bay 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 Flinders Resources with a short position of Pacific Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flinders Resources and Pacific Bay.

Diversification Opportunities for Flinders Resources and Pacific Bay

-0.76

Correlation Coefficient

Flinders Resources  Pacific Bay

Pay attention - limited upside

The 3 months correlation between Flinders and Pacific is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Flinders Resources Limited and Pacific Bay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Bay Minerals and Flinders 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 Flinders Resources Limited are associated (or correlated) with Pacific Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Bay Minerals has no effect on the direction of Flinders Resources i.e., Flinders Resources and Pacific Bay go up and down completely randomly.

Pair Corralation between Flinders Resources and Pacific Bay

Assuming the 90 days horizon Flinders Resources Limited is expected to generate 0.66 times more return on investment than Pacific Bay. However, Flinders Resources Limited is 1.51 times less risky than Pacific Bay. It trades about 0.12 of its potential returns per unit of risk. Pacific Bay Minerals is currently generating about -0.13 per unit of risk. If you would invest  445.00  in Flinders Resources Limited on December 21, 2024 and sell it today you would earn a total of  121.00  from holding Flinders Resources Limited or generate 27.19% return on investment over 90 days.

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

Flinders Resources Limited  vs.  Pacific Bay Minerals

Flinders Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flinders Resources Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Flinders Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pacific Bay Minerals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Flinders Resources and Pacific Bay

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

The idea behind Flinders Resources Limited and Pacific Bay Minerals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.