Correlation Between Prime Mining and Commerce Resources
Can any of the company-specific risk be diversified away by investing in both Prime Mining and Commerce 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 Prime Mining and Commerce Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Mining Corp and Commerce Resources Corp, you can compare the effects of market volatilities on Prime Mining and Commerce 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 Prime Mining with a short position of Commerce Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Mining and Commerce Resources.
Diversification Opportunities for Prime Mining and Commerce Resources
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prime and Commerce is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Prime Mining Corp and Commerce Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Resources Corp and Prime Mining 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 Prime Mining Corp are associated (or correlated) with Commerce Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Resources Corp has no effect on the direction of Prime Mining i.e., Prime Mining and Commerce Resources go up and down completely randomly.
Pair Corralation between Prime Mining and Commerce Resources
Assuming the 90 days horizon Prime Mining Corp is expected to generate 0.7 times more return on investment than Commerce Resources. However, Prime Mining Corp is 1.44 times less risky than Commerce Resources. It trades about -0.12 of its potential returns per unit of risk. Commerce Resources Corp is currently generating about -0.13 per unit of risk. If you would invest 137.00 in Prime Mining Corp on September 1, 2024 and sell it today you would lose (30.00) from holding Prime Mining Corp or give up 21.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Mining Corp vs. Commerce Resources Corp
Performance |
| Timeline |
| Prime Mining Corp |
| Commerce Resources Corp |
Prime Mining and Commerce Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Mining and Commerce Resources
The main advantage of trading using opposite Prime Mining and Commerce Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Mining position performs unexpectedly, Commerce 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 Commerce Resources will offset losses from the drop in Commerce Resources' long position.| Prime Mining vs. Kenorland Minerals | Prime Mining vs. Canstar Resources | Prime Mining vs. Euro Manganese | Prime Mining vs. Chalice Mining Limited |
| Commerce Resources vs. Great Western Minerals | Commerce Resources vs. StrikePoint Gold | Commerce Resources vs. Silver Elephant Mining | Commerce Resources vs. Eskay Mining 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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