Correlation Between Champion Bear and American Helium

Can any of the company-specific risk be diversified away by investing in both Champion Bear and American Helium 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 American Helium 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 American Helium, you can compare the effects of market volatilities on Champion Bear and American Helium 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 American Helium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Bear and American Helium.

Diversification Opportunities for Champion Bear and American Helium

-0.66

Correlation Coefficient

Champion Bear  American Helium

Excellent diversification

The 3 months correlation between Champion and American is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources and American Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Helium 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 American Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Helium has no effect on the direction of Champion Bear i.e., Champion Bear and American Helium go up and down completely randomly.

Pair Corralation between Champion Bear and American Helium

Assuming the 90 days horizon Champion Bear Resources is expected to generate 7.64 times more return on investment than American Helium. However, Champion Bear is 7.64 times more volatile than American Helium. It trades about 0.07 of its potential returns per unit of risk. American Helium is currently generating about 0.1 per unit of risk. If you would invest  3.00  in Champion Bear Resources on December 31, 2024 and sell it today you would lose (1.00) from holding Champion Bear Resources or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Champion Bear Resources  vs.  American Helium

Champion Bear Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Bear Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Champion Bear reported solid returns over the last few months and may actually be approaching a breakup point.

American Helium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Helium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, American Helium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Bear and American Helium

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

The idea behind Champion Bear Resources and American Helium 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.

Check out your portfolio center.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.