Correlation Between Cairn Homes and Coeur Mining

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

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

Diversification Opportunities for Cairn Homes and Coeur Mining

0.41

Correlation Coefficient

Cairn Homes  Coeur Mining

Very weak diversification

The 3 months correlation between Cairn and Coeur is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Coeur Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coeur Mining and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Coeur Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coeur Mining has no effect on the direction of Cairn Homes i.e., Cairn Homes and Coeur Mining go up and down completely randomly.

Pair Corralation between Cairn Homes and Coeur Mining

Assuming the 90 days trading horizon Cairn Homes PLC is expected to under-perform the Coeur Mining. But the stock apears to be less risky and, when comparing its historical volatility, Cairn Homes PLC is 2.42 times less risky than Coeur Mining. The stock trades about -0.08 of its potential returns per unit of risk. The Coeur Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  588.00  in Coeur Mining on December 21, 2024 and sell it today you would earn a total of  55.00  from holding Coeur Mining or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Cairn Homes PLC  vs.  Coeur Mining

Cairn Homes PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cairn Homes PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Coeur Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coeur Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Coeur Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cairn Homes and Coeur Mining

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

The idea behind Cairn Homes PLC and Coeur Mining 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.