Correlation Between Chalice Mining and Pegasus Resources

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

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

Diversification Opportunities for Chalice Mining and Pegasus Resources

-0.33

Correlation Coefficient

Chalice Mining  Pegasus Resources

Very good diversification

The 3 months correlation between Chalice and Pegasus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Pegasus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Resources and Chalice Mining 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 Chalice Mining Limited are associated (or correlated) with Pegasus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Resources has no effect on the direction of Chalice Mining i.e., Chalice Mining and Pegasus Resources go up and down completely randomly.

Pair Corralation between Chalice Mining and Pegasus Resources

Assuming the 90 days horizon Chalice Mining is expected to generate 2.73 times less return on investment than Pegasus Resources. But when comparing it to its historical volatility, Chalice Mining Limited is 2.2 times less risky than Pegasus Resources. It trades about 0.09 of its potential returns per unit of risk. Pegasus Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.80  in Pegasus Resources on December 30, 2024 and sell it today you would earn a total of  2.05  from holding Pegasus Resources or generate 53.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Chalice Mining Limited  vs.  Pegasus Resources

Chalice Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chalice Mining Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Chalice Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pegasus Resources

Risk-Adjusted Performance

OK

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

Pair Trading with Chalice Mining and Pegasus Resources

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

The idea behind Chalice Mining Limited and Pegasus 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.