Correlation Between Rubicon Organics and HudBay Minerals

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

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

Diversification Opportunities for Rubicon Organics and HudBay Minerals

-0.34

Correlation Coefficient

Rubicon Organics  HudBay Minerals

Very good diversification

The 3 months correlation between Rubicon and HudBay is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and HudBay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HudBay Minerals and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with HudBay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HudBay Minerals has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and HudBay Minerals go up and down completely randomly.

Pair Corralation between Rubicon Organics and HudBay Minerals

Assuming the 90 days trading horizon Rubicon Organics is expected to generate 2.04 times more return on investment than HudBay Minerals. However, Rubicon Organics is 2.04 times more volatile than HudBay Minerals. It trades about 0.03 of its potential returns per unit of risk. HudBay Minerals is currently generating about -0.02 per unit of risk. If you would invest  39.00  in Rubicon Organics on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Rubicon Organics or generate 0.0% return on investment over 90 days.

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

Rubicon Organics  vs.  HudBay Minerals

Rubicon Organics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HudBay Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HudBay Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, HudBay Minerals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Rubicon Organics and HudBay Minerals

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

The idea behind Rubicon Organics and HudBay Minerals 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.