Correlation Between Eastern Resources and Talisman Mining

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

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

Diversification Opportunities for Eastern Resources and Talisman Mining

-0.62

Correlation Coefficient

Eastern Resources  Talisman Mining

Excellent diversification

The 3 months correlation between Eastern and Talisman is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Resources and Talisman Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talisman Mining and Eastern 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 Eastern Resources are associated (or correlated) with Talisman Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talisman Mining has no effect on the direction of Eastern Resources i.e., Eastern Resources and Talisman Mining go up and down completely randomly.

Pair Corralation between Eastern Resources and Talisman Mining

Assuming the 90 days trading horizon Eastern Resources is expected to generate 1.01 times less return on investment than Talisman Mining. But when comparing it to its historical volatility, Eastern Resources is 1.36 times less risky than Talisman Mining. It trades about 0.09 of its potential returns per unit of risk. Talisman Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Talisman Mining on April 25, 2025 and sell it today you would earn a total of  2.00  from holding Talisman Mining or generate 14.29% return on investment over 90 days.

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

Eastern Resources  vs.  Talisman Mining

Eastern Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Eastern Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Talisman Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talisman Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Talisman Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern Resources and Talisman Mining

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

The idea behind Eastern Resources and Talisman Mining 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.