Correlation Between Gentor Resources and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Gentor Resources and Rio Tinto 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 Gentor Resources and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentor Resources and Rio Tinto Group, you can compare the effects of market volatilities on Gentor Resources and Rio Tinto 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 Gentor Resources with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentor Resources and Rio Tinto.
Diversification Opportunities for Gentor Resources and Rio Tinto
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gentor and Rio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gentor Resources and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group and Gentor 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 Gentor Resources are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of Gentor Resources i.e., Gentor Resources and Rio Tinto go up and down completely randomly.
Pair Corralation between Gentor Resources and Rio Tinto
Assuming the 90 days horizon Gentor Resources is expected to generate 1.23 times more return on investment than Rio Tinto. However, Gentor Resources is 1.23 times more volatile than Rio Tinto Group. It trades about 0.07 of its potential returns per unit of risk. Rio Tinto Group is currently generating about 0.05 per unit of risk. If you would invest 4.00 in Gentor Resources on January 24, 2024 and sell it today you would earn a total of 2.00 from holding Gentor Resources or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentor Resources vs. Rio Tinto Group
Performance |
| Timeline |
| Gentor Resources |
| Rio Tinto Group |
Gentor Resources and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentor Resources and Rio Tinto
The main advantage of trading using opposite Gentor Resources and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentor Resources position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Gentor Resources vs. Biotron Limited | Gentor Resources vs. biOasis Technologies | Gentor Resources vs. Covalon Technologies | Gentor Resources vs. Mosaic Immunoengineering |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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