Correlation Between Major Drilling and Cordoba Minerals

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

By analyzing existing cross correlation between Major Drilling Group and Cordoba Minerals Corp, you can compare the effects of market volatilities on Major Drilling and Cordoba 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 Major Drilling with a short position of Cordoba Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Cordoba Minerals.

Diversification Opportunities for Major Drilling and Cordoba Minerals

-0.08

Correlation Coefficient

Major Drilling  Cordoba Minerals

Good diversification

The 3 months correlation between Major and Cordoba is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Cordoba Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cordoba Minerals Corp and Major Drilling 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 Major Drilling Group are associated (or correlated) with Cordoba Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cordoba Minerals Corp has no effect on the direction of Major Drilling i.e., Major Drilling and Cordoba Minerals go up and down completely randomly.

Pair Corralation between Major Drilling and Cordoba Minerals

Assuming the 90 days trading horizon Major Drilling Group is expected to under-perform the Cordoba Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 3.29 times less risky than Cordoba Minerals. The stock trades about 0.0 of its potential returns per unit of risk. The Cordoba Minerals Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Cordoba Minerals Corp on December 29, 2024 and sell it today you would earn a total of  9.00  from holding Cordoba Minerals Corp or generate 23.08% return on investment over 90 days.

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

Major Drilling Group  vs.  Cordoba Minerals Corp

Major Drilling Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Major Drilling Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Major Drilling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cordoba Minerals Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cordoba Minerals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cordoba Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Major Drilling and Cordoba Minerals

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

The idea behind Major Drilling Group and Cordoba Minerals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.