Correlation Between Arcadia Minerals and Chalice Mining

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

By analyzing existing cross correlation between Arcadia Minerals Ltd and Chalice Mining Limited, you can compare the effects of market volatilities on Arcadia Minerals and Chalice 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 Arcadia Minerals with a short position of Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcadia Minerals and Chalice Mining.

Diversification Opportunities for Arcadia Minerals and Chalice Mining

0.48

Correlation Coefficient

Arcadia Minerals  Chalice Mining

Very weak diversification

The 3 months correlation between Arcadia and Chalice is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arcadia Minerals Ltd and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and Arcadia Minerals 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 Arcadia Minerals Ltd are associated (or correlated) with Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Arcadia Minerals i.e., Arcadia Minerals and Chalice Mining go up and down completely randomly.

Pair Corralation between Arcadia Minerals and Chalice Mining

Assuming the 90 days trading horizon Arcadia Minerals Ltd is expected to under-perform the Chalice Mining. But the stock apears to be less risky and, when comparing its historical volatility, Arcadia Minerals Ltd is 1.03 times less risky than Chalice Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Chalice Mining Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Chalice Mining Limited on December 2, 2024 and sell it today you would lose (7.00) from holding Chalice Mining Limited or give up 4.93% of portfolio value over 90 days.

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

Arcadia Minerals Ltd  vs.  Chalice Mining Limited

Arcadia Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcadia Minerals Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Chalice Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Chalice Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arcadia Minerals and Chalice Mining

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

The idea behind Arcadia Minerals Ltd and Chalice Mining Limited 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.