Correlation Between First Tellurium and Pacific Ridge

Can any of the company-specific risk be diversified away by investing in both First Tellurium and Pacific Ridge 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 First Tellurium and Pacific Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for First Tellurium and Pacific Ridge

-0.27

Correlation Coefficient

First Tellurium  Pacific Ridge

Very good diversification

The 3 months correlation between First and Pacific is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Tellurium Corp and Pacific Ridge Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Ridge Exploration and First Tellurium 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 First Tellurium Corp are associated (or correlated) with Pacific Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Ridge Exploration has no effect on the direction of First Tellurium i.e., First Tellurium and Pacific Ridge go up and down completely randomly.

Pair Corralation between First Tellurium and Pacific Ridge

Assuming the 90 days horizon First Tellurium is expected to generate 3.58 times less return on investment than Pacific Ridge. But when comparing it to its historical volatility, First Tellurium Corp is 4.18 times less risky than Pacific Ridge. It trades about 0.07 of its potential returns per unit of risk. Pacific Ridge Exploration is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Pacific Ridge Exploration on September 12, 2024 and sell it today you would lose (1.25) from holding Pacific Ridge Exploration or give up 41.67% of portfolio value over 90 days.

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

First Tellurium Corp  vs.  Pacific Ridge Exploration

First Tellurium Corp

Risk-Adjusted Performance

5 of 100

Modest

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

Pacific Ridge Exploration

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Ridge Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pacific Ridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Tellurium and Pacific Ridge

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

The idea behind First Tellurium Corp and Pacific Ridge Exploration 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.