Correlation Between Eskay Mining and Batero Gold

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

Diversification Opportunities for Eskay Mining and Batero Gold

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Eskay and Batero is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Batero Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batero Gold 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 Batero Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batero Gold Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and Batero Gold go up and down completely randomly.

Pair Corralation between Eskay Mining and Batero Gold

Assuming the 90 days horizon Eskay Mining Corp is expected to generate 1.25 times more return on investment than Batero Gold. However, Eskay Mining is 1.25 times more volatile than Batero Gold Corp. It trades about 0.1 of its potential returns per unit of risk. Batero Gold Corp is currently generating about -0.08 per unit of risk. If you would invest  16.00  in Eskay Mining Corp on September 23, 2024 and sell it today you would earn a total of  2.00  from holding Eskay Mining Corp or generate 12.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Eskay Mining Corp  vs.  Batero Gold Corp

 Performance 
       Timeline  
Eskay Mining Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Batero Gold Corp 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Batero Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Batero Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eskay Mining and Batero Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eskay Mining and Batero Gold

The main advantage of trading using opposite Eskay Mining and Batero Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eskay Mining position performs unexpectedly, Batero Gold 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 Batero Gold will offset losses from the drop in Batero Gold's long position.
The idea behind Eskay Mining Corp and Batero Gold 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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