Correlation Between Hummingbird Resources and Almadex Minerals

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

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

Diversification Opportunities for Hummingbird Resources and Almadex Minerals

0.54

Correlation Coefficient

Hummingbird Resources  Almadex Minerals

Very weak diversification

The 3 months correlation between Hummingbird and Almadex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hummingbird Resources PLC and Almadex Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almadex Minerals and Hummingbird 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 Hummingbird Resources PLC are associated (or correlated) with Almadex Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almadex Minerals has no effect on the direction of Hummingbird Resources i.e., Hummingbird Resources and Almadex Minerals go up and down completely randomly.

Pair Corralation between Hummingbird Resources and Almadex Minerals

Assuming the 90 days horizon Hummingbird Resources PLC is expected to under-perform the Almadex Minerals. In addition to that, Hummingbird Resources is 1.75 times more volatile than Almadex Minerals. It trades about -0.06 of its total potential returns per unit of risk. Almadex Minerals is currently generating about -0.02 per unit of volatility. If you would invest  15.00  in Almadex Minerals on September 4, 2024 and sell it today you would lose (4.00) from holding Almadex Minerals or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Hummingbird Resources PLC  vs.  Almadex Minerals

Hummingbird Resources PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hummingbird Resources PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Almadex Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almadex Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hummingbird Resources and Almadex Minerals

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

The idea behind Hummingbird Resources PLC and Almadex Minerals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.