Correlation Between Stella Jones and Mirasol Resources

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

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

Diversification Opportunities for Stella Jones and Mirasol Resources

-0.58

Correlation Coefficient

Stella Jones  Mirasol Resources

Excellent diversification

The 3 months correlation between Stella and Mirasol is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stella Jones and Mirasol Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirasol Resources and Stella Jones 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 Stella Jones are associated (or correlated) with Mirasol Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirasol Resources has no effect on the direction of Stella Jones i.e., Stella Jones and Mirasol Resources go up and down completely randomly.

Pair Corralation between Stella Jones and Mirasol Resources

Assuming the 90 days horizon Stella Jones is expected to generate 0.2 times more return on investment than Mirasol Resources. However, Stella Jones is 4.9 times less risky than Mirasol Resources. It trades about 0.22 of its potential returns per unit of risk. Mirasol Resources is currently generating about -0.15 per unit of risk. If you would invest  5,860  in Stella Jones on March 4, 2024 and sell it today you would earn a total of  273.00  from holding Stella Jones or generate 4.66% return on investment over 90 days.

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

Stella Jones  vs.  Mirasol Resources

Stella Jones

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stella Jones are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Stella Jones reported solid returns over the last few months and may actually be approaching a breakup point.

Mirasol Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirasol Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Stella Jones and Mirasol Resources

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

The idea behind Stella Jones and Mirasol 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..