Correlation Between Amarc Resources and Rio Silver

Can any of the company-specific risk be diversified away by investing in both Amarc Resources and Rio Silver 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 Rio Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amarc Resources and Rio Silver, you can compare the effects of market volatilities on Amarc Resources and Rio Silver 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 Rio Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amarc Resources and Rio Silver.

Diversification Opportunities for Amarc Resources and Rio Silver

-0.56

Correlation Coefficient

Amarc Resources  Rio Silver

Excellent diversification

The 3 months correlation between Amarc and Rio is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Amarc Resources and Rio Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Silver 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 Rio Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Silver has no effect on the direction of Amarc Resources i.e., Amarc Resources and Rio Silver go up and down completely randomly.

Pair Corralation between Amarc Resources and Rio Silver

Assuming the 90 days horizon Amarc Resources is expected to generate 2.4 times more return on investment than Rio Silver. However, Amarc Resources is 2.4 times more volatile than Rio Silver. It trades about 0.26 of its potential returns per unit of risk. Rio Silver is currently generating about -0.22 per unit of risk. If you would invest  15.00  in Amarc Resources on October 22, 2024 and sell it today you would earn a total of  35.00  from holding Amarc Resources or generate 233.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Amarc Resources  vs.  Rio Silver

Amarc Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amarc Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Amarc Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Rio Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rio Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Amarc Resources and Rio Silver

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

The idea behind Amarc Resources and Rio Silver 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.