Correlation Between Newmont and SANOK RUBBER
Can any of the company-specific risk be diversified away by investing in both Newmont and SANOK RUBBER 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 Newmont and SANOK RUBBER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont and SANOK RUBBER ZY, you can compare the effects of market volatilities on Newmont and SANOK RUBBER 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 Newmont with a short position of SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont and SANOK RUBBER.
Diversification Opportunities for Newmont and SANOK RUBBER
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Newmont and SANOK is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and Newmont 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 Newmont are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Newmont i.e., Newmont and SANOK RUBBER go up and down completely randomly.
Pair Corralation between Newmont and SANOK RUBBER
Assuming the 90 days horizon Newmont is expected to generate 0.91 times more return on investment than SANOK RUBBER. However, Newmont is 1.1 times less risky than SANOK RUBBER. It trades about 0.15 of its potential returns per unit of risk. SANOK RUBBER ZY is currently generating about 0.12 per unit of risk. If you would invest 3,668 in Newmont on December 20, 2024 and sell it today you would earn a total of 727.00 from holding Newmont or generate 19.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Newmont vs. SANOK RUBBER ZY
Performance |
Timeline |
Newmont |
SANOK RUBBER ZY |
Newmont and SANOK RUBBER Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Newmont and SANOK RUBBER
The main advantage of trading using opposite Newmont and SANOK RUBBER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont position performs unexpectedly, SANOK RUBBER 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 SANOK RUBBER will offset losses from the drop in SANOK RUBBER's long position.Newmont vs. DALATA HOTEL | Newmont vs. Dalata Hotel Group | Newmont vs. Burlington Stores | Newmont vs. Costco Wholesale Corp |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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