Correlation Between Rochester Resources and Rusoro Mining

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

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

Diversification Opportunities for Rochester Resources and Rusoro Mining

0.1

Correlation Coefficient

Rochester Resources  Rusoro Mining

Average diversification

The 3 months correlation between Rochester and Rusoro is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Rochester Resources and Rusoro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rusoro Mining and Rochester Resources 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 Rochester Resources are associated (or correlated) with Rusoro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rusoro Mining has no effect on the direction of Rochester Resources i.e., Rochester Resources and Rusoro Mining go up and down completely randomly.

Pair Corralation between Rochester Resources and Rusoro Mining

Assuming the 90 days horizon Rochester Resources is expected to generate 0.48 times more return on investment than Rusoro Mining. However, Rochester Resources is 2.08 times less risky than Rusoro Mining. It trades about -0.12 of its potential returns per unit of risk. Rusoro Mining is currently generating about -0.1 per unit of risk. If you would invest  2.00  in Rochester Resources on September 4, 2024 and sell it today you would lose (0.50) from holding Rochester Resources or give up 25.0% of portfolio value over 90 days.

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

Rochester Resources  vs.  Rusoro Mining

Rochester Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rochester Resources 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.

Rusoro Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rusoro Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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.

Pair Trading with Rochester Resources and Rusoro Mining

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

The idea behind Rochester Resources and Rusoro 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.