Correlation Between Toys R and Aspire Mining

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

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

Diversification Opportunities for Toys R and Aspire Mining

0.38

Correlation Coefficient

Toys R  Aspire Mining

Weak diversification

The 3 months correlation between Toys and Aspire is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Toys R Us and Aspire Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspire Mining and Toys R 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 Toys R Us are associated (or correlated) with Aspire Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspire Mining has no effect on the direction of Toys R i.e., Toys R and Aspire Mining go up and down completely randomly.

Pair Corralation between Toys R and Aspire Mining

Assuming the 90 days trading horizon Toys R is expected to generate 32.7 times less return on investment than Aspire Mining. In addition to that, Toys R is 1.46 times more volatile than Aspire Mining. It trades about 0.0 of its total potential returns per unit of risk. Aspire Mining is currently generating about 0.08 per unit of volatility. If you would invest  6.70  in Aspire Mining on September 24, 2024 and sell it today you would earn a total of  20.30  from holding Aspire Mining or generate 302.99% return on investment over 90 days.

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

Toys R Us  vs.  Aspire Mining

Toys R Us

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toys R Us has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aspire Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspire Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Aspire Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Toys R and Aspire Mining

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

The idea behind Toys R Us and Aspire Mining 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.