Correlation Between Power Metal and Eastinco Mining
Can any of the company-specific risk be diversified away by investing in both Power Metal and Eastinco Mining 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 Power Metal and Eastinco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metal Resources and Eastinco Mining Exploration, you can compare the effects of market volatilities on Power Metal and Eastinco Mining 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 Power Metal with a short position of Eastinco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metal and Eastinco Mining.
Diversification Opportunities for Power Metal and Eastinco Mining
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and Eastinco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Power Metal 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 Power Metal Resources are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Power Metal i.e., Power Metal and Eastinco Mining go up and down completely randomly.
Pair Corralation between Power Metal and Eastinco Mining
Assuming the 90 days trading horizon Power Metal Resources is expected to generate 9.06 times more return on investment than Eastinco Mining. However, Power Metal is 9.06 times more volatile than Eastinco Mining Exploration. It trades about 0.14 of its potential returns per unit of risk. Eastinco Mining Exploration is currently generating about 0.36 per unit of risk. If you would invest 1,300 in Power Metal Resources on September 1, 2024 and sell it today you would earn a total of 163.00 from holding Power Metal Resources or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Metal Resources vs. Eastinco Mining Exploration
Performance |
| Timeline |
| Power Metal Resources |
| Eastinco Mining Expl |
Power Metal and Eastinco Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metal and Eastinco Mining
The main advantage of trading using opposite Power Metal and Eastinco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal position performs unexpectedly, Eastinco Mining 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 Eastinco Mining will offset losses from the drop in Eastinco Mining's long position.| Power Metal vs. Givaudan SA | Power Metal vs. Antofagasta PLC | Power Metal vs. Centamin PLC | Power Metal vs. Atalaya Mining |
| Eastinco Mining vs. Wizz Air Holdings | Eastinco Mining vs. Molson Coors Beverage | Eastinco Mining vs. Porvair plc | Eastinco Mining vs. Mindflair Plc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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