Correlation Between Flinders Resources and Zephyr Minerals

Can any of the company-specific risk be diversified away by investing in both Flinders Resources and Zephyr Minerals 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 Zephyr Minerals 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 Zephyr Minerals, you can compare the effects of market volatilities on Flinders Resources and Zephyr Minerals 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 Zephyr Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flinders Resources and Zephyr Minerals.

Diversification Opportunities for Flinders Resources and Zephyr Minerals

0.39

Correlation Coefficient

Flinders Resources  Zephyr Minerals

Weak diversification

The 3 months correlation between Flinders and Zephyr is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flinders Resources Limited and Zephyr Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zephyr 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 Zephyr Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zephyr Minerals has no effect on the direction of Flinders Resources i.e., Flinders Resources and Zephyr Minerals go up and down completely randomly.

Pair Corralation between Flinders Resources and Zephyr Minerals

Assuming the 90 days horizon Flinders Resources Limited is expected to generate 0.61 times more return on investment than Zephyr Minerals. However, Flinders Resources Limited is 1.64 times less risky than Zephyr Minerals. It trades about 0.12 of its potential returns per unit of risk. Zephyr Minerals is currently generating about 0.03 per unit of risk. If you would invest  445.00  in Flinders Resources Limited on December 23, 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 Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Flinders Resources Limited  vs.  Zephyr Minerals

Flinders Resources

Risk-Adjusted Performance

OK

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 unfluctuating basic indicators, Flinders Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Zephyr Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zephyr Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zephyr Minerals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Flinders Resources and Zephyr Minerals

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

The idea behind Flinders Resources Limited and Zephyr 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..