Correlation Between Caribbean Utilities and Avrupa Minerals

Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities and Avrupa Minerals 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 Caribbean Utilities and Avrupa Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caribbean Utilities and Avrupa Minerals, you can compare the effects of market volatilities on Caribbean Utilities and Avrupa Minerals 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 Caribbean Utilities with a short position of Avrupa Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and Avrupa Minerals.

Diversification Opportunities for Caribbean Utilities and Avrupa Minerals

-0.25

Correlation Coefficient

Caribbean Utilities  Avrupa Minerals

Very good diversification

The 3 months correlation between Caribbean and Avrupa is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and Avrupa Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avrupa Minerals and Caribbean Utilities 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 Caribbean Utilities are associated (or correlated) with Avrupa Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avrupa Minerals has no effect on the direction of Caribbean Utilities i.e., Caribbean Utilities and Avrupa Minerals go up and down completely randomly.

Pair Corralation between Caribbean Utilities and Avrupa Minerals

Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 6.12 times less return on investment than Avrupa Minerals. But when comparing it to its historical volatility, Caribbean Utilities is 3.18 times less risky than Avrupa Minerals. It trades about 0.02 of its potential returns per unit of risk. Avrupa Minerals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Avrupa Minerals on October 8, 2024 and sell it today you would lose (0.50) from holding Avrupa Minerals or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.71%
Values	Daily Returns

Caribbean Utilities  vs.  Avrupa Minerals

Caribbean Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribbean Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Caribbean Utilities is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Avrupa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avrupa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Caribbean Utilities and Avrupa Minerals

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

The idea behind Caribbean Utilities and Avrupa Minerals 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 Stocks Directory module to find actively traded stocks across global markets.