Correlation Between AbraSilver Resource and Mammoth Resources

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

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

Diversification Opportunities for AbraSilver Resource and Mammoth Resources

0.63

Correlation Coefficient

AbraSilver Resource  Mammoth Resources

Poor diversification

The 3 months correlation between AbraSilver and Mammoth is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AbraSilver Resource Corp and Mammoth Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Resources Corp and AbraSilver Resource 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 AbraSilver Resource Corp are associated (or correlated) with Mammoth Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Resources Corp has no effect on the direction of AbraSilver Resource i.e., AbraSilver Resource and Mammoth Resources go up and down completely randomly.

Pair Corralation between AbraSilver Resource and Mammoth Resources

Assuming the 90 days trading horizon AbraSilver Resource Corp is expected to generate 0.43 times more return on investment than Mammoth Resources. However, AbraSilver Resource Corp is 2.35 times less risky than Mammoth Resources. It trades about 0.01 of its potential returns per unit of risk. Mammoth Resources Corp is currently generating about -0.11 per unit of risk. If you would invest  250.00  in AbraSilver Resource Corp on October 6, 2024 and sell it today you would lose (2.00) from holding AbraSilver Resource Corp or give up 0.8% of portfolio value over 90 days.

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

AbraSilver Resource Corp  vs.  Mammoth Resources Corp

AbraSilver Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mammoth Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AbraSilver Resource and Mammoth Resources

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

The idea behind AbraSilver Resource Corp and Mammoth Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.