Correlation Between Rockridge Resources and Mason Graphite

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

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

Diversification Opportunities for Rockridge Resources and Mason Graphite

-0.07

Correlation Coefficient

Rockridge Resources  Mason Graphite

Good diversification

The 3 months correlation between Rockridge and Mason is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rockridge Resources and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite and Rockridge 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 Rockridge Resources are associated (or correlated) with Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Rockridge Resources i.e., Rockridge Resources and Mason Graphite go up and down completely randomly.

Pair Corralation between Rockridge Resources and Mason Graphite

Assuming the 90 days horizon Rockridge Resources is expected to generate 1.63 times more return on investment than Mason Graphite. However, Rockridge Resources is 1.63 times more volatile than Mason Graphite. It trades about 0.01 of its potential returns per unit of risk. Mason Graphite is currently generating about -0.26 per unit of risk. If you would invest  1.29  in Rockridge Resources on September 12, 2024 and sell it today you would lose (0.09) from holding Rockridge Resources or give up 6.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Rockridge Resources  vs.  Mason Graphite

Rockridge Resources

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rockridge Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Rockridge Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Rockridge Resources and Mason Graphite

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

The idea behind Rockridge Resources and Mason Graphite 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..