Correlation Between Palamina Corp and JNC Resources
Can any of the company-specific risk be diversified away by investing in both Palamina Corp and JNC 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 Palamina Corp and JNC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palamina Corp and JNC Resources, you can compare the effects of market volatilities on Palamina Corp and JNC 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 Palamina Corp with a short position of JNC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palamina Corp and JNC Resources.
Diversification Opportunities for Palamina Corp and JNC Resources
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Palamina and JNC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and JNC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JNC Resources 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 JNC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JNC Resources has no effect on the direction of Palamina Corp i.e., Palamina Corp and JNC Resources go up and down completely randomly.
Pair Corralation between Palamina Corp and JNC Resources
Assuming the 90 days horizon Palamina Corp is expected to generate 11.18 times less return on investment than JNC Resources. But when comparing it to its historical volatility, Palamina Corp is 5.62 times less risky than JNC Resources. It trades about 0.05 of its potential returns per unit of risk. JNC Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.60 in JNC Resources on September 1, 2024 and sell it today you would lose (0.10) from holding JNC Resources or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Palamina Corp vs. JNC Resources
Performance |
| Timeline |
| Palamina Corp |
| JNC Resources |
Palamina Corp and JNC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palamina Corp and JNC Resources
The main advantage of trading using opposite Palamina Corp and JNC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palamina Corp position performs unexpectedly, JNC 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 JNC Resources will offset losses from the drop in JNC Resources' 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 |
| JNC Resources vs. Aurion Resources | JNC Resources vs. Rio2 Limited | JNC Resources vs. Palamina Corp | JNC Resources vs. BTU Metals 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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