Correlation Between SG Fleet and Minbos Resources

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

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

Diversification Opportunities for SG Fleet and Minbos Resources

0.68

Correlation Coefficient

SG Fleet  Minbos Resources

Poor diversification

The 3 months correlation between SGF and Minbos is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SG Fleet Group and Minbos Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minbos Resources and SG Fleet 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 SG Fleet Group are associated (or correlated) with Minbos Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minbos Resources has no effect on the direction of SG Fleet i.e., SG Fleet and Minbos Resources go up and down completely randomly.

Pair Corralation between SG Fleet and Minbos Resources

Assuming the 90 days trading horizon SG Fleet Group is expected to generate 0.46 times more return on investment than Minbos Resources. However, SG Fleet Group is 2.19 times less risky than Minbos Resources. It trades about 0.08 of its potential returns per unit of risk. Minbos Resources is currently generating about 0.0 per unit of risk. If you would invest  160.00  in SG Fleet Group on September 29, 2024 and sell it today you would earn a total of  180.00  from holding SG Fleet Group or generate 112.5% return on investment over 90 days.

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

SG Fleet Group  vs.  Minbos Resources

SG Fleet Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SG Fleet Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SG Fleet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Minbos Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minbos Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Minbos Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SG Fleet and Minbos Resources

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

The idea behind SG Fleet Group and Minbos 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.