Correlation Between Robex Resources and Matador Mining

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

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

Diversification Opportunities for Robex Resources and Matador Mining

-0.03

Correlation Coefficient

Robex Resources  Matador Mining

Good diversification

The 3 months correlation between Robex and Matador is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Robex Resources and Matador Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Mining and Robex 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 Robex Resources are associated (or correlated) with Matador Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Mining has no effect on the direction of Robex Resources i.e., Robex Resources and Matador Mining go up and down completely randomly.

Pair Corralation between Robex Resources and Matador Mining

Assuming the 90 days horizon Robex Resources is expected to generate 12.04 times more return on investment than Matador Mining. However, Robex Resources is 12.04 times more volatile than Matador Mining Limited. It trades about 0.26 of its potential returns per unit of risk. Matador Mining Limited is currently generating about 0.07 per unit of risk. If you would invest  26.00  in Robex Resources on September 3, 2024 and sell it today you would earn a total of  139.00  from holding Robex Resources or generate 534.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.62%
Values	Daily Returns

Robex Resources  vs.  Matador Mining Limited

Robex Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robex Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Matador Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matador Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Matador Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Robex Resources and Matador Mining

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

The idea behind Robex Resources and Matador Mining Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.