Correlation Between Trigon Metals and Decade Resources

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

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

Diversification Opportunities for Trigon Metals and Decade Resources

0.65

Correlation Coefficient

Trigon Metals  Decade Resources

Poor diversification

The 3 months correlation between Trigon and Decade is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Trigon Metals and Decade Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decade Resources and Trigon Metals 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 Trigon Metals are associated (or correlated) with Decade Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decade Resources has no effect on the direction of Trigon Metals i.e., Trigon Metals and Decade Resources go up and down completely randomly.

Pair Corralation between Trigon Metals and Decade Resources

Given the investment horizon of 90 days Trigon Metals is expected to under-perform the Decade Resources. But the stock apears to be less risky and, when comparing its historical volatility, Trigon Metals is 1.53 times less risky than Decade Resources. The stock trades about -0.24 of its potential returns per unit of risk. The Decade Resources is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Decade Resources on October 25, 2024 and sell it today you would lose (2.00) from holding Decade Resources or give up 33.33% of portfolio value over 90 days.

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

Trigon Metals  vs.  Decade Resources

Trigon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trigon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Decade Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Decade Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Trigon Metals and Decade Resources

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

The idea behind Trigon Metals and Decade 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.