Correlation Between Canstar Resources and Prime Mining
Can any of the company-specific risk be diversified away by investing in both Canstar Resources and Prime Mining 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 Canstar Resources and Prime Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canstar Resources and Prime Mining Corp, you can compare the effects of market volatilities on Canstar Resources and Prime Mining 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 Canstar Resources with a short position of Prime Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canstar Resources and Prime Mining.
Diversification Opportunities for Canstar Resources and Prime Mining
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canstar and Prime is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Canstar Resources and Prime Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Mining Corp and Canstar 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 Canstar Resources are associated (or correlated) with Prime Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Mining Corp has no effect on the direction of Canstar Resources i.e., Canstar Resources and Prime Mining go up and down completely randomly.
Pair Corralation between Canstar Resources and Prime Mining
Assuming the 90 days horizon Canstar Resources is expected to under-perform the Prime Mining. In addition to that, Canstar Resources is 1.82 times more volatile than Prime Mining Corp. It trades about -0.09 of its total potential returns per unit of risk. Prime Mining Corp is currently generating about -0.13 per unit of volatility. If you would invest 141.00 in Prime Mining Corp on August 31, 2024 and sell it today you would lose (33.00) from holding Prime Mining Corp or give up 23.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canstar Resources vs. Prime Mining Corp
Performance |
| Timeline |
| Canstar Resources |
| Prime Mining Corp |
Canstar Resources and Prime Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canstar Resources and Prime Mining
The main advantage of trading using opposite Canstar Resources and Prime Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canstar Resources position performs unexpectedly, Prime Mining 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 Prime Mining will offset losses from the drop in Prime Mining's long position.| Canstar Resources vs. Liontown Resources Limited | Canstar Resources vs. ATT Inc | Canstar Resources vs. Merck Company | Canstar Resources vs. Walt Disney |
| Prime Mining vs. Kenorland Minerals | Prime Mining vs. Canstar Resources | Prime Mining vs. Euro Manganese | Prime Mining vs. Chalice Mining Limited |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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