Correlation Between Rand Mining and Iodm

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

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

Diversification Opportunities for Rand Mining and Iodm

0.49

Correlation Coefficient

Rand Mining  Iodm

Very weak diversification

The 3 months correlation between Rand and Iodm is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rand Mining and Iodm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iodm and Rand Mining 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 Rand Mining are associated (or correlated) with Iodm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iodm has no effect on the direction of Rand Mining i.e., Rand Mining and Iodm go up and down completely randomly.

Pair Corralation between Rand Mining and Iodm

Assuming the 90 days trading horizon Rand Mining is expected to under-perform the Iodm. But the stock apears to be less risky and, when comparing its historical volatility, Rand Mining is 1.48 times less risky than Iodm. The stock trades about -0.21 of its potential returns per unit of risk. The Iodm is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Iodm on October 7, 2024 and sell it today you would lose (3.00) from holding Iodm or give up 15.79% of portfolio value over 90 days.

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

Rand Mining  vs.  Iodm

Rand Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rand Mining 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 fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Iodm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iodm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Iodm is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rand Mining and Iodm

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

The idea behind Rand Mining and Iodm 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.