Correlation Between Base Resources and Prime Meridian
Can any of the company-specific risk be diversified away by investing in both Base Resources and Prime Meridian 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 Base Resources and Prime Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Base Resources Limited and Prime Meridian Resources, you can compare the effects of market volatilities on Base Resources and Prime Meridian 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 Base Resources with a short position of Prime Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Base Resources and Prime Meridian.
Diversification Opportunities for Base Resources and Prime Meridian
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Base and Prime is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Base Resources Limited and Prime Meridian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Resources and Base 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 Base Resources Limited are associated (or correlated) with Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Resources has no effect on the direction of Base Resources i.e., Base Resources and Prime Meridian go up and down completely randomly.
Pair Corralation between Base Resources and Prime Meridian
Assuming the 90 days horizon Base Resources Limited is expected to generate 0.78 times more return on investment than Prime Meridian. However, Base Resources Limited is 1.27 times less risky than Prime Meridian. It trades about 0.05 of its potential returns per unit of risk. Prime Meridian Resources is currently generating about 0.04 per unit of risk. If you would invest 11.00 in Base Resources Limited on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Base Resources Limited or generate 81.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.73% |
| Values | Daily Returns |
Base Resources Limited vs. Prime Meridian Resources
Performance |
| Timeline |
| Base Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Prime Meridian Resources |
Base Resources and Prime Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Base Resources and Prime Meridian
The main advantage of trading using opposite Base Resources and Prime Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Base Resources position performs unexpectedly, Prime Meridian 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 Prime Meridian will offset losses from the drop in Prime Meridian's long position.| Base Resources vs. Macmahon Holdings Limited | Base Resources vs. Rokmaster Resources Corp | Base Resources vs. Hudson Resources | Base Resources vs. Thunder Gold Corp |
| Prime Meridian vs. Aurion Resources | Prime Meridian vs. Liberty Gold Corp | Prime Meridian vs. Orezone Gold Corp | Prime Meridian vs. Fortuna Silver Mines |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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