Correlation Between Lynas Rare and Anson Resources
Can any of the company-specific risk be diversified away by investing in both Lynas Rare and Anson 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 Lynas Rare and Anson Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lynas Rare Earths and Anson Resources Limited, you can compare the effects of market volatilities on Lynas Rare and Anson 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 Lynas Rare with a short position of Anson Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lynas Rare and Anson Resources.
Diversification Opportunities for Lynas Rare and Anson Resources
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lynas and Anson is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lynas Rare Earths and Anson Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anson Resources and Lynas Rare 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 Lynas Rare Earths are associated (or correlated) with Anson Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anson Resources has no effect on the direction of Lynas Rare i.e., Lynas Rare and Anson Resources go up and down completely randomly.
Pair Corralation between Lynas Rare and Anson Resources
Assuming the 90 days horizon Lynas Rare Earths is expected to generate 0.23 times more return on investment than Anson Resources. However, Lynas Rare Earths is 4.3 times less risky than Anson Resources. It trades about 0.0 of its potential returns per unit of risk. Anson Resources Limited is currently generating about -0.03 per unit of risk. If you would invest 451.00 in Lynas Rare Earths on September 3, 2024 and sell it today you would lose (6.00) from holding Lynas Rare Earths or give up 1.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Lynas Rare Earths vs. Anson Resources Limited
Performance |
Timeline |
Lynas Rare Earths |
Anson Resources |
Lynas Rare and Anson Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lynas Rare and Anson Resources
The main advantage of trading using opposite Lynas Rare and Anson Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lynas Rare position performs unexpectedly, Anson 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 Anson Resources will offset losses from the drop in Anson Resources' long position.Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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