Correlation Between Renforth Resources and Dundee Precious

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

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

Diversification Opportunities for Renforth Resources and Dundee Precious

0.54

Correlation Coefficient

Renforth Resources  Dundee Precious

Very weak diversification

The 3 months correlation between Renforth and Dundee is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Renforth Resources and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals and Renforth 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 Renforth Resources are associated (or correlated) with Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of Renforth Resources i.e., Renforth Resources and Dundee Precious go up and down completely randomly.

Pair Corralation between Renforth Resources and Dundee Precious

Assuming the 90 days horizon Renforth Resources is expected to generate 7.98 times more return on investment than Dundee Precious. However, Renforth Resources is 7.98 times more volatile than Dundee Precious Metals. It trades about 0.15 of its potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.2 per unit of risk. If you would invest  0.81  in Renforth Resources on May 12, 2025 and sell it today you would earn a total of  1.00  from holding Renforth Resources or generate 123.46% return on investment over 90 days.

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

Renforth Resources  vs.  Dundee Precious Metals

Renforth Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Renforth Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Renforth Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Dundee Precious Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dundee Precious Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Dundee Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Renforth Resources and Dundee Precious

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

The idea behind Renforth Resources and Dundee Precious Metals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.