Correlation Between Jervois Mining and Stans Energy

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

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

Diversification Opportunities for Jervois Mining and Stans Energy

-0.1

Correlation Coefficient

Jervois Mining  Stans Energy

Good diversification

The 3 months correlation between Jervois and Stans is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jervois Mining and Stans Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stans Energy Corp and Jervois Mining 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 Jervois Mining are associated (or correlated) with Stans Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stans Energy Corp has no effect on the direction of Jervois Mining i.e., Jervois Mining and Stans Energy go up and down completely randomly.

Pair Corralation between Jervois Mining and Stans Energy

Assuming the 90 days horizon Jervois Mining is expected to generate 0.67 times more return on investment than Stans Energy. However, Jervois Mining is 1.48 times less risky than Stans Energy. It trades about 0.08 of its potential returns per unit of risk. Stans Energy Corp is currently generating about -0.02 per unit of risk. If you would invest  0.80  in Jervois Mining on September 3, 2024 and sell it today you would earn a total of  0.20  from holding Jervois Mining or generate 25.0% return on investment over 90 days.

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

Jervois Mining  vs.  Stans Energy Corp

Jervois Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jervois Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Jervois Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Stans Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stans Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Jervois Mining and Stans Energy

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

The idea behind Jervois Mining and Stans Energy 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.