Correlation Between EnCore Energy and Purepoint Uranium

Can any of the company-specific risk be diversified away by investing in both EnCore Energy and Purepoint Uranium 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 EnCore Energy and Purepoint Uranium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between enCore Energy Corp and Purepoint Uranium Group, you can compare the effects of market volatilities on EnCore Energy and Purepoint Uranium 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 EnCore Energy with a short position of Purepoint Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnCore Energy and Purepoint Uranium.

Diversification Opportunities for EnCore Energy and Purepoint Uranium

0.28

Correlation Coefficient

EnCore Energy  Purepoint Uranium

Modest diversification

The 3 months correlation between EnCore and Purepoint is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Purepoint Uranium Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purepoint Uranium and EnCore Energy 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 enCore Energy Corp are associated (or correlated) with Purepoint Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purepoint Uranium has no effect on the direction of EnCore Energy i.e., EnCore Energy and Purepoint Uranium go up and down completely randomly.

Pair Corralation between EnCore Energy and Purepoint Uranium

Given the investment horizon of 90 days EnCore Energy is expected to generate 2.38 times less return on investment than Purepoint Uranium. But when comparing it to its historical volatility, enCore Energy Corp is 3.09 times less risky than Purepoint Uranium. It trades about 0.04 of its potential returns per unit of risk. Purepoint Uranium Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Purepoint Uranium Group on October 7, 2024 and sell it today you would lose (55.00) from holding Purepoint Uranium Group or give up 68.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

enCore Energy Corp  vs.  Purepoint Uranium Group

enCore Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Purepoint Uranium

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Purepoint Uranium Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Purepoint Uranium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnCore Energy and Purepoint Uranium

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

The idea behind enCore Energy Corp and Purepoint Uranium Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.