Correlation Between Endeavour Mining and Eastinco Mining

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

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

Diversification Opportunities for Endeavour Mining and Eastinco Mining

0.22

Correlation Coefficient

Endeavour Mining  Eastinco Mining

Modest diversification

The 3 months correlation between Endeavour and Eastinco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Endeavour Mining 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 Endeavour Mining Corp are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Eastinco Mining go up and down completely randomly.

Pair Corralation between Endeavour Mining and Eastinco Mining

Assuming the 90 days trading horizon Endeavour Mining Corp is expected to generate 0.78 times more return on investment than Eastinco Mining. However, Endeavour Mining Corp is 1.28 times less risky than Eastinco Mining. It trades about 0.15 of its potential returns per unit of risk. Eastinco Mining Exploration is currently generating about -0.02 per unit of risk. If you would invest  143,200  in Endeavour Mining Corp on December 24, 2024 and sell it today you would earn a total of  29,300  from holding Endeavour Mining Corp or generate 20.46% return on investment over 90 days.

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

Endeavour Mining Corp  vs.  Eastinco Mining Exploration

Endeavour Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Endeavour Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eastinco Mining Expl

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastinco Mining Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eastinco Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Endeavour Mining and Eastinco Mining

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

The idea behind Endeavour Mining Corp and Eastinco Mining Exploration 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.