Correlation Between Eskay Mining and Mirasol Resources

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

Diversification Opportunities for Eskay Mining and Mirasol Resources

-0.12

Correlation Coefficient

Eskay Mining  Mirasol Resources

Good diversification

The 3 months correlation between Eskay and Mirasol is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Mirasol Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirasol Resources 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 Mirasol Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirasol Resources has no effect on the direction of Eskay Mining i.e., Eskay Mining and Mirasol Resources go up and down completely randomly.

Pair Corralation between Eskay Mining and Mirasol Resources

Assuming the 90 days horizon Eskay Mining Corp is expected to generate 0.84 times more return on investment than Mirasol Resources. However, Eskay Mining Corp is 1.19 times less risky than Mirasol Resources. It trades about 0.1 of its potential returns per unit of risk. Mirasol Resources is currently generating about -0.03 per unit of risk. If you would invest  19.00  in Eskay Mining Corp on December 4, 2024 and sell it today you would earn a total of  4.00  from holding Eskay Mining Corp or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Eskay Mining Corp  vs.  Mirasol Resources

Eskay Mining Corp

Risk-Adjusted Performance

OK

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

Mirasol Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mirasol Resources 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 Eskay Mining and Mirasol Resources

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

The idea behind Eskay Mining Corp and Mirasol Resources 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.