Correlation Between Excellon Resources and Royal Helium

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

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

Diversification Opportunities for Excellon Resources and Royal Helium

0.79

Correlation Coefficient

Excellon Resources  Royal Helium

Poor diversification

The 3 months correlation between Excellon and Royal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Excellon Resources and Royal Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Helium 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 Royal Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Helium has no effect on the direction of Excellon Resources i.e., Excellon Resources and Royal Helium go up and down completely randomly.

Pair Corralation between Excellon Resources and Royal Helium

Assuming the 90 days trading horizon Excellon Resources is expected to under-perform the Royal Helium. But the stock apears to be less risky and, when comparing its historical volatility, Excellon Resources is 2.44 times less risky than Royal Helium. The stock trades about -0.12 of its potential returns per unit of risk. The Royal Helium is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Royal Helium on October 8, 2024 and sell it today you would lose (1.00) from holding Royal Helium or give up 28.57% of portfolio value over 90 days.

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

Excellon Resources  vs.  Royal Helium

Excellon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Royal Helium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Helium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Excellon Resources and Royal Helium

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

The idea behind Excellon Resources and Royal Helium 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 Stocks Directory module to find actively traded stocks across global markets.