Correlation Between Arbor Metals and Saville Resources

Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Saville 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 Arbor Metals and Saville Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arbor Metals Corp and Saville Resources, you can compare the effects of market volatilities on Arbor Metals and Saville 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 Arbor Metals with a short position of Saville Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Saville Resources.

Diversification Opportunities for Arbor Metals and Saville Resources

-0.66

Correlation Coefficient

Arbor Metals  Saville Resources

Excellent diversification

The 3 months correlation between Arbor and Saville is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Saville Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saville Resources and Arbor Metals 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 Arbor Metals Corp are associated (or correlated) with Saville Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saville Resources has no effect on the direction of Arbor Metals i.e., Arbor Metals and Saville Resources go up and down completely randomly.

Pair Corralation between Arbor Metals and Saville Resources

Assuming the 90 days horizon Arbor Metals Corp is expected to generate 1.06 times more return on investment than Saville Resources. However, Arbor Metals is 1.06 times more volatile than Saville Resources. It trades about 0.19 of its potential returns per unit of risk. Saville Resources is currently generating about 0.17 per unit of risk. If you would invest  27.00  in Arbor Metals Corp on October 9, 2024 and sell it today you would earn a total of  8.00  from holding Arbor Metals Corp or generate 29.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Arbor Metals Corp  vs.  Saville Resources

Arbor Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arbor Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Saville Resources

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Saville Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Saville Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbor Metals and Saville Resources

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

The idea behind Arbor Metals Corp and Saville Resources 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..