Correlation Between Commander Resources and East Africa
Can any of the company-specific risk be diversified away by investing in both Commander Resources and East Africa 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 Commander Resources and East Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commander Resources and East Africa Metals, you can compare the effects of market volatilities on Commander Resources and East Africa 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 Commander Resources with a short position of East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commander Resources and East Africa.
Diversification Opportunities for Commander Resources and East Africa
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Commander and East is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Commander Resources and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals and Commander Resources 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 Commander Resources are associated (or correlated) with East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Commander Resources i.e., Commander Resources and East Africa go up and down completely randomly.
Pair Corralation between Commander Resources and East Africa
Assuming the 90 days horizon Commander Resources is expected to generate 0.74 times more return on investment than East Africa. However, Commander Resources is 1.35 times less risky than East Africa. It trades about 0.13 of its potential returns per unit of risk. East Africa Metals is currently generating about -0.19 per unit of risk. If you would invest 4.40 in Commander Resources on August 25, 2024 and sell it today you would earn a total of 0.60 from holding Commander Resources or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commander Resources vs. East Africa Metals
Performance |
| Timeline |
| Commander Resources |
| East Africa Metals |
Commander Resources and East Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commander Resources and East Africa
The main advantage of trading using opposite Commander Resources and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commander Resources position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa's long position.| Commander Resources vs. Themac Resources Group | Commander Resources vs. East Africa Metals | Commander Resources vs. Forsys Metals Corp | Commander Resources vs. American CuMo Mining |
| East Africa vs. Ascendant Resources | East Africa vs. Cantex Mine Development | East Africa vs. Amarc Resources | East Africa vs. Sterling Metals Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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