Correlation Between Bri Chem and Millbank Mining

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

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

Diversification Opportunities for Bri Chem and Millbank Mining

-0.48

Correlation Coefficient

Bri Chem  Millbank Mining

Very good diversification

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

Pair Corralation between Bri Chem and Millbank Mining

Assuming the 90 days trading horizon Bri Chem Corp is expected to generate 1.5 times more return on investment than Millbank Mining. However, Bri Chem is 1.5 times more volatile than Millbank Mining Corp. It trades about 0.09 of its potential returns per unit of risk. Millbank Mining Corp is currently generating about 0.1 per unit of risk. If you would invest  26.00  in Bri Chem Corp on October 3, 2024 and sell it today you would earn a total of  10.00  from holding Bri Chem Corp or generate 38.46% return on investment over 90 days.

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

Bri Chem Corp  vs.  Millbank Mining Corp

Bri Chem Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bri Chem Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bri Chem displayed solid returns over the last few months and may actually be approaching a breakup point.

Millbank Mining Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Millbank Mining Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Millbank Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bri Chem and Millbank Mining

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

The idea behind Bri Chem Corp and Millbank Mining 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.