Correlation Between Singular Health and Errawarra Resources

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

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

Diversification Opportunities for Singular Health and Errawarra Resources

-0.09

Correlation Coefficient

Singular Health  Errawarra Resources

Good diversification

The 3 months correlation between Singular and Errawarra is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Singular Health Group and Errawarra Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Errawarra Resources and Singular Health 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 Singular Health Group are associated (or correlated) with Errawarra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Errawarra Resources has no effect on the direction of Singular Health i.e., Singular Health and Errawarra Resources go up and down completely randomly.

Pair Corralation between Singular Health and Errawarra Resources

Assuming the 90 days trading horizon Singular Health is expected to generate 14.26 times less return on investment than Errawarra Resources. But when comparing it to its historical volatility, Singular Health Group is 2.49 times less risky than Errawarra Resources. It trades about 0.01 of its potential returns per unit of risk. Errawarra Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5.10  in Errawarra Resources on December 29, 2024 and sell it today you would earn a total of  0.90  from holding Errawarra Resources or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Singular Health Group  vs.  Errawarra Resources

Singular Health Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Singular Health Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Singular Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Errawarra Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Errawarra Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Errawarra Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singular Health and Errawarra Resources

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

The idea behind Singular Health Group and Errawarra 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.