Correlation Between Resource Base and Dynamic Group

Can any of the company-specific risk be diversified away by investing in both Resource Base and Dynamic Group 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 Resource Base and Dynamic Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Resource Base and Dynamic Group Holdings, you can compare the effects of market volatilities on Resource Base and Dynamic Group 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 Resource Base with a short position of Dynamic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Base and Dynamic Group.

Diversification Opportunities for Resource Base and Dynamic Group

-0.34

Correlation Coefficient

Resource Base  Dynamic Group

Very good diversification

The 3 months correlation between Resource and Dynamic is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Resource Base and Dynamic Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Group Holdings and Resource Base 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 Resource Base are associated (or correlated) with Dynamic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Group Holdings has no effect on the direction of Resource Base i.e., Resource Base and Dynamic Group go up and down completely randomly.

Pair Corralation between Resource Base and Dynamic Group

Assuming the 90 days trading horizon Resource Base is expected to generate 9.39 times more return on investment than Dynamic Group. However, Resource Base is 9.39 times more volatile than Dynamic Group Holdings. It trades about 0.24 of its potential returns per unit of risk. Dynamic Group Holdings is currently generating about -0.22 per unit of risk. If you would invest  2.50  in Resource Base on April 22, 2025 and sell it today you would earn a total of  0.90  from holding Resource Base or generate 36.0% return on investment over 90 days.

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

Resource Base  vs.  Dynamic Group Holdings

Resource Base

Risk-Adjusted Performance

Modest

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

Dynamic Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynamic Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Dynamic Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Resource Base and Dynamic Group

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

The idea behind Resource Base and Dynamic Group Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.