Correlation Between Consolidated Uranium and Commander Resources

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

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

Diversification Opportunities for Consolidated Uranium and Commander Resources

0.24

Correlation Coefficient

Consolidated Uranium  Commander Resources

Modest diversification

The 3 months correlation between Consolidated and Commander is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Uranium and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources and Consolidated Uranium 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 Consolidated Uranium are associated (or correlated) with Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of Consolidated Uranium i.e., Consolidated Uranium and Commander Resources go up and down completely randomly.

Pair Corralation between Consolidated Uranium and Commander Resources

If you would invest  5.90  in Commander Resources on September 4, 2024 and sell it today you would lose (0.90) from holding Commander Resources or give up 15.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Consolidated Uranium  vs.  Commander Resources

Consolidated Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

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

Commander Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Consolidated Uranium and Commander Resources

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

The idea behind Consolidated Uranium and Commander 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.