Correlation Between Tower Resources and Mason Graphite

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

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

Diversification Opportunities for Tower Resources and Mason Graphite

-0.28

Correlation Coefficient

Tower Resources  Mason Graphite

Very good diversification

The 3 months correlation between Tower and Mason is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tower Resources and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite and Tower 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 Tower Resources are associated (or correlated) with Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Tower Resources i.e., Tower Resources and Mason Graphite go up and down completely randomly.

Pair Corralation between Tower Resources and Mason Graphite

Assuming the 90 days horizon Tower Resources is expected to generate 0.81 times more return on investment than Mason Graphite. However, Tower Resources is 1.24 times less risky than Mason Graphite. It trades about 0.1 of its potential returns per unit of risk. Mason Graphite is currently generating about 0.03 per unit of risk. If you would invest  7.75  in Tower Resources on October 24, 2024 and sell it today you would earn a total of  2.25  from holding Tower Resources or generate 29.03% return on investment over 90 days.

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

Tower Resources  vs.  Mason Graphite

Tower Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Tower Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Mason Graphite

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mason Graphite are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Mason Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tower Resources and Mason Graphite

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

The idea behind Tower Resources and Mason Graphite 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.