Correlation Between Salazar Resources and Talga

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

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

Diversification Opportunities for Salazar Resources and Talga

0.0

Correlation Coefficient

Salazar Resources  Talga

Pay attention - limited upside

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

Pair Corralation between Salazar Resources and Talga

Assuming the 90 days horizon Salazar Resources is expected to generate 3.61 times less return on investment than Talga. But when comparing it to its historical volatility, Salazar Resources Limited is 1.91 times less risky than Talga. It trades about 0.03 of its potential returns per unit of risk. Talga Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Talga Group on September 12, 2024 and sell it today you would earn a total of  3.00  from holding Talga Group or generate 11.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Salazar Resources Limited  vs.  Talga Group

Salazar Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Salazar Resources Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Salazar Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Talga Group

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talga Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talga reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salazar Resources and Talga

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

The idea behind Salazar Resources Limited and Talga Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.