Correlation Between New Pacific and Compania
Can any of the company-specific risk be diversified away by investing in both New Pacific and Compania 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 New Pacific and Compania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Pacific Metals and Compania de Minas, you can compare the effects of market volatilities on New Pacific and Compania 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 New Pacific with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Pacific and Compania.
Diversification Opportunities for New Pacific and Compania
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Compania is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding New Pacific Metals and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas and New Pacific 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 New Pacific Metals are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of New Pacific i.e., New Pacific and Compania go up and down completely randomly.
Pair Corralation between New Pacific and Compania
Given the investment horizon of 90 days New Pacific Metals is expected to generate 2.05 times more return on investment than Compania. However, New Pacific is 2.05 times more volatile than Compania de Minas. It trades about 0.0 of its potential returns per unit of risk. Compania de Minas is currently generating about -0.01 per unit of risk. If you would invest 153.00 in New Pacific Metals on November 9, 2024 and sell it today you would lose (29.00) from holding New Pacific Metals or give up 18.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Pacific Metals vs. Compania de Minas
Performance |
| Timeline |
| New Pacific Metals |
| Compania de Minas |
New Pacific and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Pacific and Compania
The main advantage of trading using opposite New Pacific and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Pacific position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.| New Pacific vs. Endeavour Silver Corp | New Pacific vs. Metalla Royalty Streaming | New Pacific vs. Hecla Mining | New Pacific vs. SilverCrest Metals |
| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. McEwen Mining | Compania vs. Hecla Mining |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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