Correlation Between Palamina Corp and BTU Metals
Can any of the company-specific risk be diversified away by investing in both Palamina Corp and BTU Metals 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 Palamina Corp and BTU Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palamina Corp and BTU Metals Corp, you can compare the effects of market volatilities on Palamina Corp and BTU Metals 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 Palamina Corp with a short position of BTU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palamina Corp and BTU Metals.
Diversification Opportunities for Palamina Corp and BTU Metals
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Palamina and BTU is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp and Palamina Corp 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 Palamina Corp are associated (or correlated) with BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of Palamina Corp i.e., Palamina Corp and BTU Metals go up and down completely randomly.
Pair Corralation between Palamina Corp and BTU Metals
Assuming the 90 days horizon Palamina Corp is expected to under-perform the BTU Metals. In addition to that, Palamina Corp is 2.61 times more volatile than BTU Metals Corp. It trades about -0.16 of its total potential returns per unit of risk. BTU Metals Corp is currently generating about 0.04 per unit of volatility. If you would invest 1.91 in BTU Metals Corp on November 1, 2024 and sell it today you would earn a total of 0.09 from holding BTU Metals Corp or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Palamina Corp vs. BTU Metals Corp
Performance |
| Timeline |
| Palamina Corp |
| BTU Metals Corp |
Palamina Corp and BTU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palamina Corp and BTU Metals
The main advantage of trading using opposite Palamina Corp and BTU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palamina Corp position performs unexpectedly, BTU Metals 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 BTU Metals will offset losses from the drop in BTU Metals' long position.| Palamina Corp vs. Gold Springs Resource | Palamina Corp vs. BTU Metals Corp | Palamina Corp vs. Norsemont Mining | Palamina Corp vs. FireFox Gold Corp |
| BTU Metals vs. Western Copper and | BTU Metals vs. Procter Gamble | BTU Metals vs. Sensient Technologies | BTU Metals vs. Saia Inc |
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 Stocks Directory module to find actively traded stocks across global markets.
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