Correlation Between Max Resource and Star Royalties

Can any of the company-specific risk be diversified away by investing in both Max Resource and Star Royalties 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 Max Resource and Star Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Max Resource Corp and Star Royalties, you can compare the effects of market volatilities on Max Resource and Star Royalties 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 Max Resource with a short position of Star Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Resource and Star Royalties.

Diversification Opportunities for Max Resource and Star Royalties

0.08

Correlation Coefficient

Max Resource  Star Royalties

Significant diversification

The 3 months correlation between Max and Star is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Max Resource Corp and Star Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Royalties and Max Resource 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 Max Resource Corp are associated (or correlated) with Star Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Royalties has no effect on the direction of Max Resource i.e., Max Resource and Star Royalties go up and down completely randomly.

Pair Corralation between Max Resource and Star Royalties

Assuming the 90 days horizon Max Resource Corp is expected to under-perform the Star Royalties. In addition to that, Max Resource is 2.51 times more volatile than Star Royalties. It trades about -0.05 of its total potential returns per unit of risk. Star Royalties is currently generating about 0.02 per unit of volatility. If you would invest  19.00  in Star Royalties on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Star Royalties or generate 0.0% return on investment over 90 days.

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

Max Resource Corp  vs.  Star Royalties

Max Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Max Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Star Royalties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Star Royalties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Star Royalties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Max Resource and Star Royalties

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

The idea behind Max Resource Corp and Star Royalties 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.