Correlation Between Pilbara Minerals and Mineral Resources

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

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

Diversification Opportunities for Pilbara Minerals and Mineral Resources

0.36

Correlation Coefficient

Pilbara Minerals  Mineral Resources

Weak diversification

The 3 months correlation between Pilbara and Mineral is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pilbara Minerals Limited and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources and Pilbara Minerals 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 Pilbara Minerals Limited are associated (or correlated) with Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of Pilbara Minerals i.e., Pilbara Minerals and Mineral Resources go up and down completely randomly.

Pair Corralation between Pilbara Minerals and Mineral Resources

Assuming the 90 days horizon Pilbara Minerals is expected to generate 5.02 times less return on investment than Mineral Resources. But when comparing it to its historical volatility, Pilbara Minerals Limited is 2.3 times less risky than Mineral Resources. It trades about 0.06 of its potential returns per unit of risk. Mineral Resources Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  936.00  in Mineral Resources Limited on May 5, 2025 and sell it today you would earn a total of  794.00  from holding Mineral Resources Limited or generate 84.83% return on investment over 90 days.

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

Pilbara Minerals Limited  vs.  Mineral Resources Limited

Pilbara Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pilbara Minerals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Pilbara Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Mineral Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mineral Resources Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mineral Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pilbara Minerals and Mineral Resources

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

The idea behind Pilbara Minerals Limited and Mineral Resources 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.