Correlation Between Flagship Investments and Talisman Mining

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

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

Diversification Opportunities for Flagship Investments and Talisman Mining

-0.02

Correlation Coefficient

Flagship Investments  Talisman Mining

Good diversification

The 3 months correlation between Flagship and Talisman is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Talisman Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talisman Mining and Flagship Investments 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 Flagship Investments are associated (or correlated) with Talisman Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talisman Mining has no effect on the direction of Flagship Investments i.e., Flagship Investments and Talisman Mining go up and down completely randomly.

Pair Corralation between Flagship Investments and Talisman Mining

Assuming the 90 days trading horizon Flagship Investments is expected to generate 4.96 times less return on investment than Talisman Mining. But when comparing it to its historical volatility, Flagship Investments is 3.61 times less risky than Talisman Mining. It trades about 0.03 of its potential returns per unit of risk. Talisman Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Talisman Mining on September 20, 2024 and sell it today you would earn a total of  8.00  from holding Talisman Mining or generate 57.14% return on investment over 90 days.

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

Flagship Investments  vs.  Talisman Mining

Flagship Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Talisman Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talisman Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Talisman Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Flagship Investments and Talisman Mining

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

The idea behind Flagship Investments and Talisman 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.