Correlation Between Compania and New Pacific
Can any of the company-specific risk be diversified away by investing in both Compania and New Pacific 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 New Pacific 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 New Pacific Metals, you can compare the effects of market volatilities on Compania and New Pacific 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 New Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and New Pacific.
Diversification Opportunities for Compania and New Pacific
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compania and New is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific Metals 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 New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Compania i.e., Compania and New Pacific go up and down completely randomly.
Pair Corralation between Compania and New Pacific
Considering the 90-day investment horizon Compania de Minas is expected to generate 0.53 times more return on investment than New Pacific. However, Compania de Minas is 1.87 times less risky than New Pacific. It trades about -0.2 of its potential returns per unit of risk. New Pacific Metals is currently generating about -0.22 per unit of risk. If you would invest 1,315 in Compania de Minas on August 27, 2024 and sell it today you would lose (115.00) from holding Compania de Minas or give up 8.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Minas vs. New Pacific Metals
Performance |
| Timeline |
| Compania de Minas |
| New Pacific Metals |
Compania and New Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and New Pacific
The main advantage of trading using opposite Compania and New Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, New Pacific 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 New Pacific will offset losses from the drop in New Pacific's long position.| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. Hecla Mining | Compania vs. Avino Silver Gold |
| New Pacific vs. Endeavour Silver Corp | New Pacific vs. Metalla Royalty Streaming | New Pacific vs. Hecla Mining | New Pacific vs. Gatos Silver |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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