Correlation Between Cache Exploration and Northern Star

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

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

Diversification Opportunities for Cache Exploration and Northern Star

0.0

Correlation Coefficient

Cache Exploration  Northern Star

Pay attention - limited upside

The 3 months correlation between Cache and Northern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cache Exploration and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources and Cache Exploration 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 Cache Exploration are associated (or correlated) with Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Cache Exploration i.e., Cache Exploration and Northern Star go up and down completely randomly.

Pair Corralation between Cache Exploration and Northern Star

If you would invest  937.00  in Northern Star Resources on December 22, 2024 and sell it today you would earn a total of  199.00  from holding Northern Star Resources or generate 21.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Cache Exploration  vs.  Northern Star Resources

Cache Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cache Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cache Exploration is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Northern Star Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Star Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northern Star reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cache Exploration and Northern Star

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

The idea behind Cache Exploration and Northern Star Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..