Correlation Between Chalice Mining and Northern Star
Can any of the company-specific risk be diversified away by investing in both Chalice Mining and Northern 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 Chalice Mining and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chalice Mining Limited and Northern Star Resources, you can compare the effects of market volatilities on Chalice Mining and Northern 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 Chalice Mining with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chalice Mining and Northern Star.
Diversification Opportunities for Chalice Mining and Northern Star
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chalice and Northern is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources and Chalice Mining 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 Chalice Mining Limited are associated (or correlated) with Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Chalice Mining i.e., Chalice Mining and Northern Star go up and down completely randomly.
Pair Corralation between Chalice Mining and Northern Star
Assuming the 90 days trading horizon Chalice Mining Limited is expected to under-perform the Northern Star. In addition to that, Chalice Mining is 2.22 times more volatile than Northern Star Resources. It trades about -0.04 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.06 per unit of volatility. If you would invest 1,029 in Northern Star Resources on September 3, 2024 and sell it today you would earn a total of 722.00 from holding Northern Star Resources or generate 70.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chalice Mining Limited vs. Northern Star Resources
Performance |
| Timeline |
| Chalice Mining |
| Northern Star Resources |
Chalice Mining and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chalice Mining and Northern Star
The main advantage of trading using opposite Chalice Mining and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chalice Mining position performs unexpectedly, Northern 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 Northern Star will offset losses from the drop in Northern Star's long position.| Chalice Mining vs. Northern Star Resources | Chalice Mining vs. Evolution Mining | Chalice Mining vs. Bluescope Steel | Chalice Mining vs. Aneka Tambang Tbk |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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