Correlation Between Cache Exploration and West African

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

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

Diversification Opportunities for Cache Exploration and West African

0.0

Correlation Coefficient

Cache Exploration  West African

Pay attention - limited upside

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

Pair Corralation between Cache Exploration and West African

If you would invest  91.00  in West African Resources on October 22, 2024 and sell it today you would earn a total of  11.00  from holding West African Resources or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Cache Exploration  vs.  West African Resources

Cache Exploration

Risk-Adjusted Performance

0 of 100

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.

West African Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cache Exploration and West African

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

The idea behind Cache Exploration and West African 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.