Correlation Between Infinite Ore and Power Metals

Can any of the company-specific risk be diversified away by investing in both Infinite Ore and Power Metals 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 Infinite Ore and Power Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Infinite Ore and Power Metals

-0.48

Correlation Coefficient

Infinite Ore  Power Metals

Very good diversification

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

Pair Corralation between Infinite Ore and Power Metals

Assuming the 90 days horizon Infinite Ore Corp is expected to generate 2.44 times more return on investment than Power Metals. However, Infinite Ore is 2.44 times more volatile than Power Metals Corp. It trades about 0.0 of its potential returns per unit of risk. Power Metals Corp is currently generating about 0.0 per unit of risk. If you would invest  1.80  in Infinite Ore Corp on October 26, 2024 and sell it today you would lose (0.30) from holding Infinite Ore Corp or give up 16.67% of portfolio value over 90 days.

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

Infinite Ore Corp  vs.  Power Metals Corp

Infinite Ore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infinite Ore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Infinite Ore is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Power Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Infinite Ore and Power Metals

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

The idea behind Infinite Ore Corp and Power Metals 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.