Correlation Between Progressive Planet and Searchlight Minerals

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

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

Diversification Opportunities for Progressive Planet and Searchlight Minerals

-0.55

Correlation Coefficient

Progressive Planet  Searchlight Minerals

Excellent diversification

The 3 months correlation between Progressive and Searchlight is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Planet Solutions and Searchlight Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Minerals Corp and Progressive Planet 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 Progressive Planet Solutions are associated (or correlated) with Searchlight Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Minerals Corp has no effect on the direction of Progressive Planet i.e., Progressive Planet and Searchlight Minerals go up and down completely randomly.

Pair Corralation between Progressive Planet and Searchlight Minerals

Assuming the 90 days horizon Progressive Planet is expected to generate 23.45 times less return on investment than Searchlight Minerals. But when comparing it to its historical volatility, Progressive Planet Solutions is 4.68 times less risky than Searchlight Minerals. It trades about 0.02 of its potential returns per unit of risk. Searchlight Minerals Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Searchlight Minerals Corp on October 12, 2024 and sell it today you would lose (0.37) from holding Searchlight Minerals Corp or give up 61.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Progressive Planet Solutions  vs.  Searchlight Minerals Corp

Progressive Planet

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Planet Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Progressive Planet reported solid returns over the last few months and may actually be approaching a breakup point.

Searchlight Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Searchlight Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Searchlight Minerals is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Progressive Planet and Searchlight Minerals

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

The idea behind Progressive Planet Solutions and Searchlight 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.