Correlation Between Rubicon Water and Alderan Resources

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

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

Diversification Opportunities for Rubicon Water and Alderan Resources

0.06

Correlation Coefficient

Rubicon Water  Alderan Resources

Significant diversification

The 3 months correlation between Rubicon and Alderan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Water and Alderan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alderan Resources and Rubicon Water 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 Water are associated (or correlated) with Alderan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alderan Resources has no effect on the direction of Rubicon Water i.e., Rubicon Water and Alderan Resources go up and down completely randomly.

Pair Corralation between Rubicon Water and Alderan Resources

Assuming the 90 days trading horizon Rubicon Water is expected to generate 0.48 times more return on investment than Alderan Resources. However, Rubicon Water is 2.1 times less risky than Alderan Resources. It trades about 0.08 of its potential returns per unit of risk. Alderan Resources is currently generating about -0.01 per unit of risk. If you would invest  25.00  in Rubicon Water on October 6, 2024 and sell it today you would earn a total of  4.00  from holding Rubicon Water or generate 16.0% return on investment over 90 days.

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

Rubicon Water  vs.  Alderan Resources

Rubicon Water

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Water are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Rubicon Water unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alderan Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alderan Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Rubicon Water and Alderan Resources

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

The idea behind Rubicon Water and Alderan 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.