Correlation Between American Creek and Arras Minerals

Can any of the company-specific risk be diversified away by investing in both American Creek and Arras Minerals 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 American Creek and Arras Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for American Creek and Arras Minerals

-0.77

Correlation Coefficient

American Creek  Arras Minerals

Pay attention - limited upside

The 3 months correlation between American and Arras is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Arras Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arras Minerals Corp and American Creek 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 American Creek Resources are associated (or correlated) with Arras Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arras Minerals Corp has no effect on the direction of American Creek i.e., American Creek and Arras Minerals go up and down completely randomly.

Pair Corralation between American Creek and Arras Minerals

Assuming the 90 days horizon American Creek Resources is expected to under-perform the Arras Minerals. But the otc stock apears to be less risky and, when comparing its historical volatility, American Creek Resources is 1.17 times less risky than Arras Minerals. The otc stock trades about -0.15 of its potential returns per unit of risk. The Arras Minerals Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Arras Minerals Corp on November 28, 2024 and sell it today you would earn a total of  30.00  from holding Arras Minerals Corp or generate 125.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

American Creek Resources  vs.  Arras Minerals Corp

American Creek Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Creek Resources 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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Arras Minerals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arras Minerals Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Arras Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Creek and Arras Minerals

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

The idea behind American Creek Resources and Arras Minerals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.