Correlation Between Fresnillo PLC and Dynaresource

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

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

Diversification Opportunities for Fresnillo PLC and Dynaresource

-0.52

Correlation Coefficient

Fresnillo PLC  Dynaresource

Excellent diversification

The 3 months correlation between Fresnillo and Dynaresource is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fresnillo PLC and Dynaresource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynaresource and Fresnillo PLC 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 Fresnillo PLC are associated (or correlated) with Dynaresource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynaresource has no effect on the direction of Fresnillo PLC i.e., Fresnillo PLC and Dynaresource go up and down completely randomly.

Pair Corralation between Fresnillo PLC and Dynaresource

Assuming the 90 days horizon Fresnillo PLC is expected to generate 0.72 times more return on investment than Dynaresource. However, Fresnillo PLC is 1.4 times less risky than Dynaresource. It trades about 0.14 of its potential returns per unit of risk. Dynaresource is currently generating about -0.06 per unit of risk. If you would invest  615.00  in Fresnillo PLC on February 2, 2024 and sell it today you would earn a total of  93.00  from holding Fresnillo PLC or generate 15.12% return on investment over 90 days.

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

Fresnillo PLC  vs.  Dynaresource

Fresnillo PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fresnillo PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fresnillo PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Dynaresource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dynaresource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Dynaresource is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fresnillo PLC and Dynaresource

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

The idea behind Fresnillo PLC and Dynaresource 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.