Correlation Between Northern Star and De Grey

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

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

Diversification Opportunities for Northern Star and De Grey

0.99

Correlation Coefficient

Northern Star  De Grey

No risk reduction

The 3 months correlation between Northern and DEG is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining and Northern Star 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 Northern Star Resources are associated (or correlated) with De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Northern Star i.e., Northern Star and De Grey go up and down completely randomly.

Pair Corralation between Northern Star and De Grey

Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.93 times more return on investment than De Grey. However, Northern Star Resources is 1.08 times less risky than De Grey. It trades about 0.19 of its potential returns per unit of risk. De Grey Mining is currently generating about 0.18 per unit of risk. If you would invest  1,534  in Northern Star Resources on December 30, 2024 and sell it today you would earn a total of  329.00  from holding Northern Star Resources or generate 21.45% return on investment over 90 days.

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

Northern Star Resources  vs.  De Grey Mining

Northern Star Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Star Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Northern Star unveiled solid returns over the last few months and may actually be approaching a breakup point.

De Grey Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern Star and De Grey

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

The idea behind Northern Star Resources and De Grey Mining 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.