Correlation Between Champion Bear and Dios Exploration

Can any of the company-specific risk be diversified away by investing in both Champion Bear and Dios Exploration 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 Champion Bear and Dios Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champion Bear Resources and Dios Exploration, you can compare the effects of market volatilities on Champion Bear and Dios Exploration 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 Champion Bear with a short position of Dios Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Bear and Dios Exploration.

Diversification Opportunities for Champion Bear and Dios Exploration

0.22

Correlation Coefficient

Champion Bear  Dios Exploration

Modest diversification

The 3 months correlation between Champion and Dios is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources and Dios Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dios Exploration and Champion Bear 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 Champion Bear Resources are associated (or correlated) with Dios Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dios Exploration has no effect on the direction of Champion Bear i.e., Champion Bear and Dios Exploration go up and down completely randomly.

Pair Corralation between Champion Bear and Dios Exploration

Assuming the 90 days horizon Champion Bear Resources is expected to generate 1.24 times more return on investment than Dios Exploration. However, Champion Bear is 1.24 times more volatile than Dios Exploration. It trades about 0.05 of its potential returns per unit of risk. Dios Exploration is currently generating about 0.04 per unit of risk. If you would invest  9.00  in Champion Bear Resources on September 14, 2024 and sell it today you would lose (6.00) from holding Champion Bear Resources or give up 66.67% of portfolio value over 90 days.

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

Champion Bear Resources  vs.  Dios Exploration

Champion Bear Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Bear Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Champion Bear is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dios Exploration

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dios Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dios Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Bear and Dios Exploration

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

The idea behind Champion Bear Resources and Dios Exploration 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.