Correlation Between BTU Metals and Palamina Corp
Can any of the company-specific risk be diversified away by investing in both BTU Metals and Palamina Corp 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 BTU Metals and Palamina Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTU Metals Corp and Palamina Corp, you can compare the effects of market volatilities on BTU Metals and Palamina Corp 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 BTU Metals with a short position of Palamina Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTU Metals and Palamina Corp.
Diversification Opportunities for BTU Metals and Palamina Corp
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BTU and Palamina is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and Palamina Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palamina Corp and BTU Metals 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 BTU Metals Corp are associated (or correlated) with Palamina Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palamina Corp has no effect on the direction of BTU Metals i.e., BTU Metals and Palamina Corp go up and down completely randomly.
Pair Corralation between BTU Metals and Palamina Corp
Assuming the 90 days horizon BTU Metals Corp is expected to generate 0.14 times more return on investment than Palamina Corp. However, BTU Metals Corp is 7.06 times less risky than Palamina Corp. It trades about 0.21 of its potential returns per unit of risk. Palamina Corp is currently generating about -0.25 per unit of risk. If you would invest 1.91 in BTU Metals Corp on August 29, 2024 and sell it today you would earn a total of 0.14 from holding BTU Metals Corp or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTU Metals Corp vs. Palamina Corp
Performance |
| Timeline |
| BTU Metals Corp |
| Palamina Corp |
BTU Metals and Palamina Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTU Metals and Palamina Corp
The main advantage of trading using opposite BTU Metals and Palamina Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTU Metals position performs unexpectedly, Palamina Corp 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 Palamina Corp will offset losses from the drop in Palamina Corp's long position.| BTU Metals vs. Aurion Resources | BTU Metals vs. Liberty Gold Corp | BTU Metals vs. Orezone Gold Corp | BTU Metals vs. Fortuna Silver Mines |
| Palamina Corp vs. Aurion Resources | Palamina Corp vs. Liberty Gold Corp | Palamina Corp vs. Orezone Gold Corp | Palamina Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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