Correlation Between Strategic Resources and Eros Resources

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

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

Diversification Opportunities for Strategic Resources and Eros Resources

0.0

Correlation Coefficient

Strategic Resources  Eros Resources

Pay attention - limited upside

The 3 months correlation between Strategic and Eros is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Resources and Eros Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros Resources Corp and Strategic 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 Strategic Resources are associated (or correlated) with Eros Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros Resources Corp has no effect on the direction of Strategic Resources i.e., Strategic Resources and Eros Resources go up and down completely randomly.

Pair Corralation between Strategic Resources and Eros Resources

If you would invest  3.08  in Eros Resources Corp on September 3, 2024 and sell it today you would lose (0.29) from holding Eros Resources Corp or give up 9.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Strategic Resources  vs.  Eros Resources Corp

Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eros Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Strategic Resources and Eros Resources

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

The idea behind Strategic Resources and Eros Resources Corp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.