Correlation Between Amarc Resources and Eagle Plains

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Can any of the company-specific risk be diversified away by investing in both Amarc Resources and Eagle Plains 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 Amarc Resources and Eagle Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amarc Resources and Eagle Plains Resources, you can compare the effects of market volatilities on Amarc Resources and Eagle Plains 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 Amarc Resources with a short position of Eagle Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amarc Resources and Eagle Plains.

Diversification Opportunities for Amarc Resources and Eagle Plains

AmarcEagleDiversified AwayAmarcEagleDiversified Away100%
-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amarc and Eagle is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Amarc Resources and Eagle Plains Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Plains Resources and Amarc Resources 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 Amarc Resources are associated (or correlated) with Eagle Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Plains Resources has no effect on the direction of Amarc Resources i.e., Amarc Resources and Eagle Plains go up and down completely randomly.

Pair Corralation between Amarc Resources and Eagle Plains

Assuming the 90 days horizon Amarc Resources is expected to generate 1.37 times more return on investment than Eagle Plains. However, Amarc Resources is 1.37 times more volatile than Eagle Plains Resources. It trades about 0.08 of its potential returns per unit of risk. Eagle Plains Resources is currently generating about 0.0 per unit of risk. If you would invest  9.00  in Amarc Resources on September 28, 2024 and sell it today you would earn a total of  11.00  from holding Amarc Resources or generate 122.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amarc Resources  vs.  Eagle Plains Resources

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-505101520
JavaScript chart by amCharts 3.21.15AHR EPL
       Timeline  
Amarc Resources 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Amarc Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Amarc Resources showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.140.150.160.170.180.190.20.210.22
Eagle Plains Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eagle Plains Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eagle Plains is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.090.0950.10.1050.11

Amarc Resources and Eagle Plains Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-18.85-14.11-9.38-4.650.084.799.6514.5219.39 0.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15AHR EPL
       Returns  

Pair Trading with Amarc Resources and Eagle Plains

The main advantage of trading using opposite Amarc Resources and Eagle Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amarc Resources position performs unexpectedly, Eagle Plains 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 Eagle Plains will offset losses from the drop in Eagle Plains' long position.
The idea behind Amarc Resources and Eagle Plains 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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