Correlation Between Teras Resources and Monument Mining

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

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

Diversification Opportunities for Teras Resources and Monument Mining

0.0

Correlation Coefficient

Teras Resources  Monument Mining

Pay attention - limited upside

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

Pair Corralation between Teras Resources and Monument Mining

If you would invest  25.00  in Monument Mining Limited on October 9, 2024 and sell it today you would earn a total of  6.00  from holding Monument Mining Limited or generate 24.0% return on investment over 90 days.

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

Teras Resources  vs.  Monument Mining Limited

Teras Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Monument Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Monument Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teras Resources and Monument Mining

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

The idea behind Teras Resources and Monument Mining Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.