Correlation Between Fresnillo PLC and Condor Resources

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

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

Diversification Opportunities for Fresnillo PLC and Condor Resources

-0.35

Correlation Coefficient

Fresnillo PLC  Condor Resources

Very good diversification

The 3 months correlation between Fresnillo and Condor is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fresnillo PLC and Condor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Resources and Fresnillo PLC 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 Fresnillo PLC are associated (or correlated) with Condor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Resources has no effect on the direction of Fresnillo PLC i.e., Fresnillo PLC and Condor Resources go up and down completely randomly.

Pair Corralation between Fresnillo PLC and Condor Resources

Assuming the 90 days horizon Fresnillo PLC is expected to generate 3.46 times less return on investment than Condor Resources. But when comparing it to its historical volatility, Fresnillo PLC is 8.22 times less risky than Condor Resources. It trades about 0.12 of its potential returns per unit of risk. Condor Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Condor Resources on November 29, 2024 and sell it today you would lose (1.60) from holding Condor Resources or give up 14.55% of portfolio value over 90 days.

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

Fresnillo PLC  vs.  Condor Resources

Fresnillo PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fresnillo PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fresnillo PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Condor Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Condor Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Condor Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresnillo PLC and Condor Resources

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

The idea behind Fresnillo PLC and Condor Resources 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.