Correlation Between Selan Exploration and 360 ONE

Can any of the company-specific risk be diversified away by investing in both Selan Exploration and 360 ONE 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 Selan Exploration and 360 ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Selan Exploration Technology and 360 ONE WAM, you can compare the effects of market volatilities on Selan Exploration and 360 ONE 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 Selan Exploration with a short position of 360 ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selan Exploration and 360 ONE.

Diversification Opportunities for Selan Exploration and 360 ONE

0.31

Correlation Coefficient

Selan Exploration  360 ONE

Weak diversification

The 3 months correlation between Selan and 360 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Selan Exploration Technology and 360 ONE WAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 360 ONE WAM and Selan Exploration 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 Selan Exploration Technology are associated (or correlated) with 360 ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 360 ONE WAM has no effect on the direction of Selan Exploration i.e., Selan Exploration and 360 ONE go up and down completely randomly.

Pair Corralation between Selan Exploration and 360 ONE

Assuming the 90 days trading horizon Selan Exploration Technology is expected to generate 1.52 times more return on investment than 360 ONE. However, Selan Exploration is 1.52 times more volatile than 360 ONE WAM. It trades about 0.09 of its potential returns per unit of risk. 360 ONE WAM is currently generating about 0.11 per unit of risk. If you would invest  24,165  in Selan Exploration Technology on September 20, 2024 and sell it today you would earn a total of  63,140  from holding Selan Exploration Technology or generate 261.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Selan Exploration Technology  vs.  360 ONE WAM

Selan Exploration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Selan Exploration Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Selan Exploration is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

360 ONE WAM

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 360 ONE WAM are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 360 ONE sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Selan Exploration and 360 ONE

The main advantage of trading using opposite Selan Exploration and 360 ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selan Exploration position performs unexpectedly, 360 ONE 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 360 ONE will offset losses from the drop in 360 ONE's long position.

The idea behind Selan Exploration Technology and 360 ONE WAM 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.