Correlation Between Emerita Resources and Bradda Head

Can any of the company-specific risk be diversified away by investing in both Emerita Resources and Bradda Head 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 Bradda Head 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 Bradda Head Lithium, you can compare the effects of market volatilities on Emerita Resources and Bradda Head 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 Bradda Head. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerita Resources and Bradda Head.

Diversification Opportunities for Emerita Resources and Bradda Head

-0.14

Correlation Coefficient

Emerita Resources  Bradda Head

Good diversification

The 3 months correlation between Emerita and Bradda is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Emerita Resources Corp and Bradda Head Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bradda Head Lithium 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 Bradda Head. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bradda Head Lithium has no effect on the direction of Emerita Resources i.e., Emerita Resources and Bradda Head go up and down completely randomly.

Pair Corralation between Emerita Resources and Bradda Head

Assuming the 90 days horizon Emerita Resources Corp is expected to generate 0.61 times more return on investment than Bradda Head. However, Emerita Resources Corp is 1.63 times less risky than Bradda Head. It trades about 0.07 of its potential returns per unit of risk. Bradda Head Lithium is currently generating about 0.01 per unit of risk. If you would invest  83.00  in Emerita Resources Corp on December 29, 2024 and sell it today you would earn a total of  15.00  from holding Emerita Resources Corp or generate 18.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Emerita Resources Corp  vs.  Bradda Head Lithium

Emerita Resources Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerita Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Emerita Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Bradda Head Lithium

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Emerita Resources and Bradda Head

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

The idea behind Emerita Resources Corp and Bradda Head Lithium 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..