Correlation Between CanAlaska Uranium and Laramide Resources

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

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

Diversification Opportunities for CanAlaska Uranium and Laramide Resources

0.56

Correlation Coefficient

CanAlaska Uranium  Laramide Resources

Very weak diversification

The 3 months correlation between CanAlaska and Laramide is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CanAlaska Uranium and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources and CanAlaska 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 CanAlaska Uranium are associated (or correlated) with Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of CanAlaska Uranium i.e., CanAlaska Uranium and Laramide Resources go up and down completely randomly.

Pair Corralation between CanAlaska Uranium and Laramide Resources

Assuming the 90 days horizon CanAlaska Uranium is expected to generate 0.86 times more return on investment than Laramide Resources. However, CanAlaska Uranium is 1.16 times less risky than Laramide Resources. It trades about -0.07 of its potential returns per unit of risk. Laramide Resources is currently generating about -0.12 per unit of risk. If you would invest  79.00  in CanAlaska Uranium on September 23, 2024 and sell it today you would lose (5.00) from holding CanAlaska Uranium or give up 6.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CanAlaska Uranium  vs.  Laramide Resources

CanAlaska Uranium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CanAlaska Uranium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CanAlaska Uranium may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Laramide Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laramide Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Laramide Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CanAlaska Uranium and Laramide Resources

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

The idea behind CanAlaska Uranium and Laramide 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.