Correlation Between East Africa and Calibre Mining
Can any of the company-specific risk be diversified away by investing in both East Africa and Calibre 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 East Africa and Calibre Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Calibre Mining Corp, you can compare the effects of market volatilities on East Africa and Calibre 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 East Africa with a short position of Calibre Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Calibre Mining.
Diversification Opportunities for East Africa and Calibre Mining
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Calibre is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp and East Africa 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 East Africa Metals are associated (or correlated) with Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of East Africa i.e., East Africa and Calibre Mining go up and down completely randomly.
Pair Corralation between East Africa and Calibre Mining
Assuming the 90 days trading horizon East Africa Metals is expected to generate 2.98 times more return on investment than Calibre Mining. However, East Africa is 2.98 times more volatile than Calibre Mining Corp. It trades about 0.05 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about 0.07 per unit of risk. If you would invest 6.12 in East Africa Metals on December 13, 2024 and sell it today you would earn a total of 1.23 from holding East Africa Metals or generate 20.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Africa Metals vs. Calibre Mining Corp
Performance |
| Timeline |
| East Africa Metals |
| Calibre Mining Corp |
East Africa and Calibre Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Calibre Mining
The main advantage of trading using opposite East Africa and Calibre Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, Calibre 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 Calibre Mining will offset losses from the drop in Calibre Mining's long position.| East Africa vs. CHRYSALIS INVESTMENTS LTD | ||
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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