Correlation Between Major Drilling and Ressources Minieres

Can any of the company-specific risk be diversified away by investing in both Major Drilling and Ressources Minieres 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 Major Drilling and Ressources Minieres into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Major Drilling Group and Ressources Minieres Radisson, you can compare the effects of market volatilities on Major Drilling and Ressources Minieres 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 Major Drilling with a short position of Ressources Minieres. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Ressources Minieres.

Diversification Opportunities for Major Drilling and Ressources Minieres

0.16

Correlation Coefficient

Major Drilling  Ressources Minieres

Average diversification

The 3 months correlation between Major and Ressources is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Ressources Minieres Radisson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ressources Minieres and Major Drilling 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 Major Drilling Group are associated (or correlated) with Ressources Minieres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ressources Minieres has no effect on the direction of Major Drilling i.e., Major Drilling and Ressources Minieres go up and down completely randomly.

Pair Corralation between Major Drilling and Ressources Minieres

Assuming the 90 days trading horizon Major Drilling is expected to generate 3.6 times less return on investment than Ressources Minieres. But when comparing it to its historical volatility, Major Drilling Group is 3.32 times less risky than Ressources Minieres. It trades about 0.09 of its potential returns per unit of risk. Ressources Minieres Radisson is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Ressources Minieres Radisson on September 12, 2024 and sell it today you would earn a total of  7.00  from holding Ressources Minieres Radisson or generate 30.43% return on investment over 90 days.

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

Major Drilling Group  vs.  Ressources Minieres Radisson

Major Drilling Group

Risk-Adjusted Performance

6 of 100

Modest

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

Ressources Minieres

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ressources Minieres Radisson are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ressources Minieres showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Major Drilling and Ressources Minieres

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

The idea behind Major Drilling Group and Ressources Minieres Radisson 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.