Correlation Between Eskay Mining and AbraSilver Resource

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

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

Diversification Opportunities for Eskay Mining and AbraSilver Resource

-0.32

Correlation Coefficient

Eskay Mining  AbraSilver Resource

Very good diversification

The 3 months correlation between Eskay and AbraSilver is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp and Eskay 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 Eskay Mining Corp are associated (or correlated) with AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and AbraSilver Resource go up and down completely randomly.

Pair Corralation between Eskay Mining and AbraSilver Resource

Assuming the 90 days horizon Eskay Mining Corp is expected to under-perform the AbraSilver Resource. In addition to that, Eskay Mining is 1.91 times more volatile than AbraSilver Resource Corp. It trades about -0.01 of its total potential returns per unit of risk. AbraSilver Resource Corp is currently generating about 0.01 per unit of volatility. If you would invest  257.00  in AbraSilver Resource Corp on September 14, 2024 and sell it today you would lose (6.00) from holding AbraSilver Resource Corp or give up 2.33% of portfolio value over 90 days.

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

Eskay Mining Corp  vs.  AbraSilver Resource Corp

Eskay Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eskay Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eskay Mining is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AbraSilver Resource Corp

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days AbraSilver Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AbraSilver Resource is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Eskay Mining and AbraSilver Resource

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

The idea behind Eskay Mining Corp and AbraSilver Resource Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.