Correlation Between RTG Mining and Trigon Metals

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

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

Diversification Opportunities for RTG Mining and Trigon Metals

-0.11

Correlation Coefficient

RTG Mining  Trigon Metals

Good diversification

The 3 months correlation between RTG and Trigon is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding RTG Mining and Trigon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trigon Metals and RTG 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 RTG Mining are associated (or correlated) with Trigon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trigon Metals has no effect on the direction of RTG Mining i.e., RTG Mining and Trigon Metals go up and down completely randomly.

Pair Corralation between RTG Mining and Trigon Metals

Assuming the 90 days trading horizon RTG Mining is expected to generate 1.56 times more return on investment than Trigon Metals. However, RTG Mining is 1.56 times more volatile than Trigon Metals. It trades about 0.04 of its potential returns per unit of risk. Trigon Metals is currently generating about -0.08 per unit of risk. If you would invest  3.00  in RTG Mining on September 4, 2024 and sell it today you would lose (0.50) from holding RTG Mining or give up 16.67% of portfolio value over 90 days.

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

RTG Mining  vs.  Trigon Metals

RTG Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTG Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Trigon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trigon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with RTG Mining and Trigon Metals

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

The idea behind RTG Mining and Trigon Metals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.