Correlation Between Ivanhoe Mines and Prime Mining

Can any of the company-specific risk be diversified away by investing in both Ivanhoe Mines and Prime Mining 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 Ivanhoe Mines and Prime Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Ivanhoe Mines and Prime Mining

0.64

Correlation Coefficient

Ivanhoe Mines  Prime Mining

Poor diversification

The 3 months correlation between Ivanhoe and Prime is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines and Prime Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Mining Corp and Ivanhoe Mines 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 Ivanhoe Mines are associated (or correlated) with Prime Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Mining Corp has no effect on the direction of Ivanhoe Mines i.e., Ivanhoe Mines and Prime Mining go up and down completely randomly.

Pair Corralation between Ivanhoe Mines and Prime Mining

Assuming the 90 days horizon Ivanhoe Mines is expected to generate 0.6 times more return on investment than Prime Mining. However, Ivanhoe Mines is 1.66 times less risky than Prime Mining. It trades about 0.04 of its potential returns per unit of risk. Prime Mining Corp is currently generating about 0.0 per unit of risk. If you would invest  872.00  in Ivanhoe Mines on October 7, 2024 and sell it today you would earn a total of  335.00  from holding Ivanhoe Mines or generate 38.42% return on investment over 90 days.

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

Ivanhoe Mines  vs.  Prime Mining Corp

Ivanhoe Mines

Risk-Adjusted Performance

0 of 100

Very Weak

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

Prime Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Mining Corp 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ivanhoe Mines and Prime Mining

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

The idea behind Ivanhoe Mines and Prime Mining 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.