Correlation Between Robex Resources and Renforth Resources

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

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

Diversification Opportunities for Robex Resources and Renforth Resources

-0.22

Correlation Coefficient

Robex Resources  Renforth Resources

Very good diversification

The 3 months correlation between Robex and Renforth is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Robex Resources and Renforth Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renforth Resources 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 Renforth Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renforth Resources has no effect on the direction of Robex Resources i.e., Robex Resources and Renforth Resources go up and down completely randomly.

Pair Corralation between Robex Resources and Renforth Resources

Assuming the 90 days horizon Robex Resources is expected to generate 0.35 times more return on investment than Renforth Resources. However, Robex Resources is 2.87 times less risky than Renforth Resources. It trades about 0.14 of its potential returns per unit of risk. Renforth Resources is currently generating about 0.04 per unit of risk. If you would invest  149.00  in Robex Resources on December 3, 2024 and sell it today you would earn a total of  42.00  from holding Robex Resources or generate 28.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Robex Resources  vs.  Renforth Resources

Robex Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Robex Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Robex Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Renforth Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Renforth Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Renforth Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Robex Resources and Renforth Resources

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

The idea behind Robex Resources and Renforth Resources 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.