Correlation Between Torq Resources and Regulus Resources

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

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

Diversification Opportunities for Torq Resources and Regulus Resources

-0.08

Correlation Coefficient

Torq Resources  Regulus Resources

Good diversification

The 3 months correlation between Torq and Regulus is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Torq Resources and Regulus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regulus Resources and Torq 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 Torq Resources are associated (or correlated) with Regulus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regulus Resources has no effect on the direction of Torq Resources i.e., Torq Resources and Regulus Resources go up and down completely randomly.

Pair Corralation between Torq Resources and Regulus Resources

Assuming the 90 days trading horizon Torq Resources is expected to under-perform the Regulus Resources. In addition to that, Torq Resources is 1.62 times more volatile than Regulus Resources. It trades about -0.04 of its total potential returns per unit of risk. Regulus Resources is currently generating about 0.07 per unit of volatility. If you would invest  77.00  in Regulus Resources on September 5, 2024 and sell it today you would earn a total of  118.00  from holding Regulus Resources or generate 153.25% return on investment over 90 days.

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

Torq Resources  vs.  Regulus Resources

Torq Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Torq Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Torq Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Regulus Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regulus Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Regulus Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Torq Resources and Regulus Resources

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

The idea behind Torq Resources and Regulus 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.