Correlation Between Metals X and Amarc Resources
Can any of the company-specific risk be diversified away by investing in both Metals X and Amarc 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 Metals X and Amarc Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals X Limited and Amarc Resources, you can compare the effects of market volatilities on Metals X and Amarc 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 Metals X with a short position of Amarc Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals X and Amarc Resources.
Diversification Opportunities for Metals X and Amarc Resources
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metals and Amarc is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited and Amarc Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarc Resources and Metals X 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 Metals X Limited are associated (or correlated) with Amarc Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarc Resources has no effect on the direction of Metals X i.e., Metals X and Amarc Resources go up and down completely randomly.
Pair Corralation between Metals X and Amarc Resources
Assuming the 90 days horizon Metals X is expected to generate 10.9 times less return on investment than Amarc Resources. But when comparing it to its historical volatility, Metals X Limited is 1.06 times less risky than Amarc Resources. It trades about 0.0 of its potential returns per unit of risk. Amarc Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Amarc Resources on August 25, 2024 and sell it today you would earn a total of 2.00 from holding Amarc Resources or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals X Limited vs. Amarc Resources
Performance |
| Timeline |
| Metals X Limited |
| Amarc Resources |
Metals X and Amarc Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals X and Amarc Resources
The main advantage of trading using opposite Metals X and Amarc Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals X position performs unexpectedly, Amarc 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 Amarc Resources will offset losses from the drop in Amarc Resources' long position.| Metals X vs. Norra Metals Corp | Metals X vs. ZincX Resources Corp | Metals X vs. Nuinsco Resources Limited | Metals X vs. South Star Battery |
| Amarc Resources vs. Norra Metals Corp | Amarc Resources vs. ZincX Resources Corp | Amarc Resources vs. Nuinsco Resources Limited | Amarc Resources vs. South Star Battery |
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 CEOs Directory module to screen CEOs from public companies around the world.
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