Correlation Between Eskay Mining and Commerce Resources

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

Diversification Opportunities for Eskay Mining and Commerce Resources

0.0

Correlation Coefficient

Eskay Mining  Commerce Resources

Pay attention - limited upside

The 3 months correlation between Eskay and Commerce is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Commerce Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Resources 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 Commerce Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Resources Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and Commerce Resources go up and down completely randomly.

Pair Corralation between Eskay Mining and Commerce Resources

Assuming the 90 days horizon Eskay Mining Corp is expected to generate 0.89 times more return on investment than Commerce Resources. However, Eskay Mining Corp is 1.12 times less risky than Commerce Resources. It trades about 0.07 of its potential returns per unit of risk. Commerce Resources Corp is currently generating about 0.04 per unit of risk. If you would invest  14.00  in Eskay Mining Corp on December 1, 2024 and sell it today you would earn a total of  2.00  from holding Eskay Mining Corp or generate 14.29% return on investment over 90 days.

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

Eskay Mining Corp  vs.  Commerce Resources Corp

Eskay Mining Corp

Risk-Adjusted Performance

Modest

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

Commerce Resources Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Resources Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Commerce Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eskay Mining and Commerce Resources

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

The idea behind Eskay Mining Corp and Commerce Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.