Correlation Between Globex Mining and Rubicon Organics

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

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

Diversification Opportunities for Globex Mining and Rubicon Organics

0.49

Correlation Coefficient

Globex Mining  Rubicon Organics

Very weak diversification

The 3 months correlation between Globex and Rubicon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Globex Mining i.e., Globex Mining and Rubicon Organics go up and down completely randomly.

Pair Corralation between Globex Mining and Rubicon Organics

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 0.53 times more return on investment than Rubicon Organics. However, Globex Mining Enterprises is 1.88 times less risky than Rubicon Organics. It trades about 0.23 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.0 per unit of risk. If you would invest  85.00  in Globex Mining Enterprises on October 24, 2024 and sell it today you would earn a total of  48.00  from holding Globex Mining Enterprises or generate 56.47% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  Rubicon Organics

Globex Mining Enterprises

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Globex Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Rubicon Organics

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Globex Mining and Rubicon Organics

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

The idea behind Globex Mining Enterprises and Rubicon Organics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.