Correlation Between CanAlaska Uranium and Gensource Potash

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

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

Diversification Opportunities for CanAlaska Uranium and Gensource Potash

0.42

Correlation Coefficient

CanAlaska Uranium  Gensource Potash

Very weak diversification

The 3 months correlation between CanAlaska and Gensource is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CanAlaska Uranium and Gensource Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensource Potash 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 Gensource Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensource Potash has no effect on the direction of CanAlaska Uranium i.e., CanAlaska Uranium and Gensource Potash go up and down completely randomly.

Pair Corralation between CanAlaska Uranium and Gensource Potash

Assuming the 90 days horizon CanAlaska Uranium is expected to generate 27.26 times less return on investment than Gensource Potash. But when comparing it to its historical volatility, CanAlaska Uranium is 9.5 times less risky than Gensource Potash. It trades about 0.04 of its potential returns per unit of risk. Gensource Potash is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Gensource Potash on October 11, 2024 and sell it today you would lose (9.00) from holding Gensource Potash or give up 81.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

CanAlaska Uranium  vs.  Gensource Potash

CanAlaska Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gensource Potash

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gensource Potash are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Gensource Potash reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CanAlaska Uranium and Gensource Potash

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

The idea behind CanAlaska Uranium and Gensource Potash 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.