Correlation Between Arbor Metals and Titan Mining

Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Titan 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 Arbor Metals and Titan Mining 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 Titan Mining Corp, you can compare the effects of market volatilities on Arbor Metals and Titan 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 Arbor Metals with a short position of Titan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Titan Mining.

Diversification Opportunities for Arbor Metals and Titan Mining

-0.01

Correlation Coefficient

Arbor Metals  Titan Mining

Good diversification

The 3 months correlation between Arbor and Titan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Titan Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Mining Corp 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 Titan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Mining Corp has no effect on the direction of Arbor Metals i.e., Arbor Metals and Titan Mining go up and down completely randomly.

Pair Corralation between Arbor Metals and Titan Mining

Assuming the 90 days horizon Arbor Metals Corp is expected to generate 2.37 times more return on investment than Titan Mining. However, Arbor Metals is 2.37 times more volatile than Titan Mining Corp. It trades about 0.34 of its potential returns per unit of risk. Titan Mining Corp is currently generating about -0.08 per unit of risk. If you would invest  24.00  in Arbor Metals Corp on October 22, 2024 and sell it today you would earn a total of  17.00  from holding Arbor Metals Corp or generate 70.83% return on investment over 90 days.

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

Arbor Metals Corp  vs.  Titan Mining Corp

Arbor Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Titan Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Titan Mining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arbor Metals and Titan Mining

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

The idea behind Arbor Metals Corp and Titan Mining Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.