Correlation Between Compania and Arctic Star
Can any of the company-specific risk be diversified away by investing in both Compania and Arctic Star 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 Compania and Arctic Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Minas and Arctic Star Exploration, you can compare the effects of market volatilities on Compania and Arctic Star 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 Compania with a short position of Arctic Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Arctic Star.
Diversification Opportunities for Compania and Arctic Star
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compania and Arctic is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Arctic Star Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Star Exploration and Compania 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 Compania de Minas are associated (or correlated) with Arctic Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Star Exploration has no effect on the direction of Compania i.e., Compania and Arctic Star go up and down completely randomly.
Pair Corralation between Compania and Arctic Star
Considering the 90-day investment horizon Compania de Minas is expected to under-perform the Arctic Star. But the stock apears to be less risky and, when comparing its historical volatility, Compania de Minas is 2.03 times less risky than Arctic Star. The stock trades about -0.14 of its potential returns per unit of risk. The Arctic Star Exploration is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 0.94 in Arctic Star Exploration on August 25, 2024 and sell it today you would lose (0.07) from holding Arctic Star Exploration or give up 7.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Minas vs. Arctic Star Exploration
Performance |
| Timeline |
| Compania de Minas |
| Arctic Star Exploration |
Compania and Arctic Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Arctic Star
The main advantage of trading using opposite Compania and Arctic Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Arctic Star 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 Arctic Star will offset losses from the drop in Arctic Star's long position.| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. McEwen Mining | Compania vs. Hecla Mining |
| Arctic Star vs. Morningstar Unconstrained Allocation | Arctic Star vs. High Yield Municipal Fund | Arctic Star vs. Knife River | Arctic Star vs. Klckner Co SE |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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