Correlation Between Emerita Resources and Hannan Metals

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

Diversification Opportunities for Emerita Resources and Hannan Metals

EmeritaHannanDiversified AwayEmeritaHannanDiversified Away100%
0.56
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Emerita Resources and Hannan Metals

Assuming the 90 days horizon Emerita Resources Corp is expected to generate 0.84 times more return on investment than Hannan Metals. However, Emerita Resources Corp is 1.19 times less risky than Hannan Metals. It trades about 0.31 of its potential returns per unit of risk. Hannan Metals is currently generating about 0.2 per unit of risk. If you would invest  42.00  in Emerita Resources Corp on November 22, 2024 and sell it today you would earn a total of  76.00  from holding Emerita Resources Corp or generate 180.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.08%
ValuesDaily Returns

Emerita Resources Corp  vs.  Hannan Metals

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50050100150200
JavaScript chart by amCharts 3.21.15EMOTF HANNF
       Timeline  
Emerita Resources Corp 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Emerita Resources Corp are ranked lower than 24 (%) 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.60.811.21.4
Hannan Metals 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Hannan Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hannan Metals reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.50.60.70.80.9

Emerita Resources and Hannan Metals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-17.44-13.06-8.68-4.30.04.9510.0815.220.3325.45 0.0080.0090.0100.011
JavaScript chart by amCharts 3.21.15EMOTF HANNF
       Returns  

Pair Trading with Emerita Resources and Hannan Metals

The main advantage of trading using opposite Emerita Resources and Hannan Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerita Resources position performs unexpectedly, Hannan Metals 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 Hannan Metals will offset losses from the drop in Hannan Metals' long position.
The idea behind Emerita Resources Corp and Hannan Metals 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 Stocks Directory module to find actively traded stocks across global markets.

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