Correlation Between Excellon Resources and Birchtech Corp

Can any of the company-specific risk be diversified away by investing in both Excellon Resources and Birchtech Corp 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 Excellon Resources and Birchtech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Excellon Resources and Birchtech Corp

-0.31

Correlation Coefficient

Excellon Resources  Birchtech Corp

Very good diversification

The 3 months correlation between Excellon and Birchtech is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Excellon Resources and Birchtech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birchtech Corp and Excellon Resources 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 Excellon Resources are associated (or correlated) with Birchtech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birchtech Corp has no effect on the direction of Excellon Resources i.e., Excellon Resources and Birchtech Corp go up and down completely randomly.

Pair Corralation between Excellon Resources and Birchtech Corp

Assuming the 90 days trading horizon Excellon Resources is expected to generate 1.13 times more return on investment than Birchtech Corp. However, Excellon Resources is 1.13 times more volatile than Birchtech Corp. It trades about -0.02 of its potential returns per unit of risk. Birchtech Corp is currently generating about -0.23 per unit of risk. If you would invest  10.00  in Excellon Resources on September 22, 2024 and sell it today you would lose (0.50) from holding Excellon Resources or give up 5.0% of portfolio value over 90 days.

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

Excellon Resources  vs.  Birchtech Corp

Excellon Resources

Risk-Adjusted Performance

1 of 100

Weak

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

Birchtech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birchtech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Excellon Resources and Birchtech Corp

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

The idea behind Excellon Resources and Birchtech 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.