Correlation Between Valiant Eagle and King Resources

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

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

Diversification Opportunities for Valiant Eagle and King Resources

0.09

Correlation Coefficient

Valiant Eagle  King Resources

Significant diversification

The 3 months correlation between Valiant and King is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Valiant Eagle and King Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Resources and Valiant Eagle 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 Valiant Eagle are associated (or correlated) with King Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Resources has no effect on the direction of Valiant Eagle i.e., Valiant Eagle and King Resources go up and down completely randomly.

Pair Corralation between Valiant Eagle and King Resources

Given the investment horizon of 90 days Valiant Eagle is expected to generate 5.11 times more return on investment than King Resources. However, Valiant Eagle is 5.11 times more volatile than King Resources. It trades about 0.17 of its potential returns per unit of risk. King Resources is currently generating about 0.18 per unit of risk. If you would invest  0.01  in Valiant Eagle on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Valiant Eagle or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Valiant Eagle  vs.  King Resources

Valiant Eagle

Risk-Adjusted Performance

Good

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

King Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in King Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, King Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valiant Eagle and King Resources

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

The idea behind Valiant Eagle and King 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.