Correlation Between American CuMo and Commander Resources

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

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

Diversification Opportunities for American CuMo and Commander Resources

-0.21

Correlation Coefficient

American CuMo  Commander Resources

Very good diversification

The 3 months correlation between American and Commander is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding American CuMo Mining and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources and American CuMo 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 American CuMo Mining are associated (or correlated) with Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of American CuMo i.e., American CuMo and Commander Resources go up and down completely randomly.

Pair Corralation between American CuMo and Commander Resources

Assuming the 90 days horizon American CuMo Mining is expected to generate 0.12 times more return on investment than Commander Resources. However, American CuMo Mining is 8.01 times less risky than Commander Resources. It trades about -0.12 of its potential returns per unit of risk. Commander Resources is currently generating about -0.02 per unit of risk. If you would invest  1.60  in American CuMo Mining on December 30, 2024 and sell it today you would lose (0.10) from holding American CuMo Mining or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

American CuMo Mining  vs.  Commander Resources

American CuMo Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days American CuMo Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, American CuMo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Commander Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commander Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 American CuMo and Commander Resources

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

The idea behind American CuMo Mining and Commander Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.