Correlation Between NEW PACIFIC and Eurasia Mining

Can any of the company-specific risk be diversified away by investing in both NEW PACIFIC and Eurasia 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 NEW PACIFIC and Eurasia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NEW PACIFIC METALS and Eurasia Mining Plc, you can compare the effects of market volatilities on NEW PACIFIC and Eurasia 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 NEW PACIFIC with a short position of Eurasia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW PACIFIC and Eurasia Mining.

Diversification Opportunities for NEW PACIFIC and Eurasia Mining

0.0

Correlation Coefficient

NEW PACIFIC  Eurasia Mining

Pay attention - limited upside

The 3 months correlation between NEW and Eurasia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NEW PACIFIC METALS and Eurasia Mining Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurasia Mining Plc and NEW PACIFIC 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 NEW PACIFIC METALS are associated (or correlated) with Eurasia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurasia Mining Plc has no effect on the direction of NEW PACIFIC i.e., NEW PACIFIC and Eurasia Mining go up and down completely randomly.

Pair Corralation between NEW PACIFIC and Eurasia Mining

Assuming the 90 days trading horizon NEW PACIFIC METALS is expected to under-perform the Eurasia Mining. But the stock apears to be less risky and, when comparing its historical volatility, NEW PACIFIC METALS is 14.06 times less risky than Eurasia Mining. The stock trades about -0.01 of its potential returns per unit of risk. The Eurasia Mining Plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Eurasia Mining Plc on October 24, 2024 and sell it today you would lose (1.20) from holding Eurasia Mining Plc or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

NEW PACIFIC METALS  vs.  Eurasia Mining Plc

NEW PACIFIC METALS

Risk-Adjusted Performance

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Very Weak

Over the last 90 days NEW PACIFIC METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eurasia Mining Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurasia Mining Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eurasia Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NEW PACIFIC and Eurasia Mining

The main advantage of trading using opposite NEW PACIFIC and Eurasia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW PACIFIC position performs unexpectedly, Eurasia 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 Eurasia Mining will offset losses from the drop in Eurasia Mining's long position.

The idea behind NEW PACIFIC METALS and Eurasia Mining Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.