Correlation Between New Destiny and Asiabasemetals

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

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

Diversification Opportunities for New Destiny and Asiabasemetals

0.56

Correlation Coefficient

New Destiny  Asiabasemetals

Very weak diversification

The 3 months correlation between New and Asiabasemetals is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding New Destiny Mining and Asiabasemetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabasemetals and New Destiny 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 New Destiny Mining are associated (or correlated) with Asiabasemetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabasemetals has no effect on the direction of New Destiny i.e., New Destiny and Asiabasemetals go up and down completely randomly.

Pair Corralation between New Destiny and Asiabasemetals

Assuming the 90 days horizon New Destiny Mining is expected to under-perform the Asiabasemetals. But the stock apears to be less risky and, when comparing its historical volatility, New Destiny Mining is 1.61 times less risky than Asiabasemetals. The stock trades about -0.21 of its potential returns per unit of risk. The Asiabasemetals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Asiabasemetals on September 15, 2024 and sell it today you would lose (1.00) from holding Asiabasemetals or give up 11.11% of portfolio value over 90 days.

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

New Destiny Mining  vs.  Asiabasemetals

New Destiny Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Destiny Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Asiabasemetals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiabasemetals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Asiabasemetals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Destiny and Asiabasemetals

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

The idea behind New Destiny Mining and Asiabasemetals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.