Correlation Between Novo Resources and Puma Exploration
Can any of the company-specific risk be diversified away by investing in both Novo Resources and Puma Exploration 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 Novo Resources and Puma Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novo Resources Corp and Puma Exploration, you can compare the effects of market volatilities on Novo Resources and Puma Exploration 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 Novo Resources with a short position of Puma Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Resources and Puma Exploration.
Diversification Opportunities for Novo Resources and Puma Exploration
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novo and Puma is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Novo Resources Corp and Puma Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Exploration and Novo 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 Novo Resources Corp are associated (or correlated) with Puma Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puma Exploration has no effect on the direction of Novo Resources i.e., Novo Resources and Puma Exploration go up and down completely randomly.
Pair Corralation between Novo Resources and Puma Exploration
Assuming the 90 days horizon Novo Resources Corp is expected to under-perform the Puma Exploration. But the otc stock apears to be less risky and, when comparing its historical volatility, Novo Resources Corp is 1.38 times less risky than Puma Exploration. The otc stock trades about -0.05 of its potential returns per unit of risk. The Puma Exploration is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Puma Exploration on August 29, 2024 and sell it today you would lose (3.00) from holding Puma Exploration or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Novo Resources Corp vs. Puma Exploration
Performance |
| Timeline |
| Novo Resources Corp |
| Puma Exploration |
Novo Resources and Puma Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Resources and Puma Exploration
The main advantage of trading using opposite Novo Resources and Puma Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Resources position performs unexpectedly, Puma Exploration 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 Puma Exploration will offset losses from the drop in Puma Exploration's long position.| Novo Resources vs. Lion One Metals | Novo Resources vs. Irving Resources | Novo Resources vs. Eloro Resources | Novo Resources vs. Eskay Mining Corp |
| Puma Exploration vs. Sixty North Gold | Puma Exploration vs. Red Pine Exploration | Puma Exploration vs. Grande Portage Resources | Puma Exploration vs. Altamira Gold 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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