Correlation Between Syrah Resources and Mundoro Capital

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

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

Diversification Opportunities for Syrah Resources and Mundoro Capital

0.31

Correlation Coefficient

Syrah Resources  Mundoro Capital

Weak diversification

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

Pair Corralation between Syrah Resources and Mundoro Capital

Assuming the 90 days horizon Syrah Resources Limited is expected to generate 2.6 times more return on investment than Mundoro Capital. However, Syrah Resources is 2.6 times more volatile than Mundoro Capital. It trades about 0.17 of its potential returns per unit of risk. Mundoro Capital is currently generating about 0.12 per unit of risk. If you would invest  7.47  in Syrah Resources Limited on December 29, 2024 and sell it today you would earn a total of  10.53  from holding Syrah Resources Limited or generate 140.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Syrah Resources Limited  vs.  Mundoro Capital

Syrah Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Syrah Resources Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Syrah Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Mundoro Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mundoro Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Mundoro Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Syrah Resources and Mundoro Capital

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

The idea behind Syrah Resources Limited and Mundoro Capital 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.