Correlation Between Compania and Solaris Resources
Can any of the company-specific risk be diversified away by investing in both Compania and Solaris Resources 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 Solaris Resources 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 Solaris Resources, you can compare the effects of market volatilities on Compania and Solaris Resources 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 Solaris Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Solaris Resources.
Diversification Opportunities for Compania and Solaris Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Compania and Solaris is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Solaris Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Resources 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 Solaris Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Resources has no effect on the direction of Compania i.e., Compania and Solaris Resources go up and down completely randomly.
Pair Corralation between Compania and Solaris Resources
Considering the 90-day investment horizon Compania de Minas is expected to under-perform the Solaris Resources. But the stock apears to be less risky and, when comparing its historical volatility, Compania de Minas is 2.11 times less risky than Solaris Resources. The stock trades about -0.13 of its potential returns per unit of risk. The Solaris Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 322.00 in Solaris Resources on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Solaris Resources or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Minas vs. Solaris Resources
Performance |
| Timeline |
| Compania de Minas |
| Solaris Resources |
Compania and Solaris Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Solaris Resources
The main advantage of trading using opposite Compania and Solaris Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Solaris Resources 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 Solaris Resources will offset losses from the drop in Solaris Resources' long position.| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. McEwen Mining | Compania vs. Hecla Mining |
| Solaris Resources vs. Hecla Mining | Solaris Resources vs. Vox Royalty Corp | Solaris Resources vs. Avino Silver Gold | Solaris Resources vs. Compania de Minas |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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