Correlation Between Emerita Resources and Big Ridge

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

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

Diversification Opportunities for Emerita Resources and Big Ridge

-0.08

Correlation Coefficient

Emerita Resources  Big Ridge

Good diversification

The 3 months correlation between Emerita and Big is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Emerita Resources Corp and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and Emerita Resources 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 Emerita Resources Corp are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Emerita Resources i.e., Emerita Resources and Big Ridge go up and down completely randomly.

Pair Corralation between Emerita Resources and Big Ridge

Assuming the 90 days horizon Emerita Resources Corp is expected to generate 0.93 times more return on investment than Big Ridge. However, Emerita Resources Corp is 1.08 times less risky than Big Ridge. It trades about 0.09 of its potential returns per unit of risk. Big Ridge Gold is currently generating about -0.03 per unit of risk. If you would invest  115.00  in Emerita Resources Corp on December 21, 2024 and sell it today you would earn a total of  26.00  from holding Emerita Resources Corp or generate 22.61% return on investment over 90 days.

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

Emerita Resources Corp  vs.  Big Ridge Gold

Emerita Resources Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerita Resources Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Emerita Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Big Ridge Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Ridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Emerita Resources and Big Ridge

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

The idea behind Emerita Resources Corp and Big Ridge Gold 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.