Correlation Between Native Mineral and Lindian Resources

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

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

Diversification Opportunities for Native Mineral and Lindian Resources

-0.51

Correlation Coefficient

Native Mineral  Lindian Resources

Excellent diversification

The 3 months correlation between Native and Lindian is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Native Mineral Resources and Lindian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindian Resources and Native Mineral 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 Native Mineral Resources are associated (or correlated) with Lindian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindian Resources has no effect on the direction of Native Mineral i.e., Native Mineral and Lindian Resources go up and down completely randomly.

Pair Corralation between Native Mineral and Lindian Resources

Assuming the 90 days trading horizon Native Mineral Resources is expected to generate 0.88 times more return on investment than Lindian Resources. However, Native Mineral Resources is 1.14 times less risky than Lindian Resources. It trades about 0.02 of its potential returns per unit of risk. Lindian Resources is currently generating about 0.01 per unit of risk. If you would invest  3.20  in Native Mineral Resources on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Native Mineral Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Native Mineral Resources  vs.  Lindian Resources

Native Mineral Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Native Mineral Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Native Mineral unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lindian Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindian Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Native Mineral and Lindian Resources

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

The idea behind Native Mineral Resources and Lindian Resources 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..