Correlation Between Mammoth Resources and Stampede Drilling

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

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

Diversification Opportunities for Mammoth Resources and Stampede Drilling

0.15

Correlation Coefficient

Mammoth Resources  Stampede Drilling

Average diversification

The 3 months correlation between Mammoth and Stampede is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mammoth Resources Corp and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling and Mammoth 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 Mammoth Resources Corp are associated (or correlated) with Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Mammoth Resources i.e., Mammoth Resources and Stampede Drilling go up and down completely randomly.

Pair Corralation between Mammoth Resources and Stampede Drilling

Assuming the 90 days horizon Mammoth Resources Corp is expected to generate 4.24 times more return on investment than Stampede Drilling. However, Mammoth Resources is 4.24 times more volatile than Stampede Drilling. It trades about 0.05 of its potential returns per unit of risk. Stampede Drilling is currently generating about -0.02 per unit of risk. If you would invest  4.00  in Mammoth Resources Corp on October 4, 2024 and sell it today you would lose (2.50) from holding Mammoth Resources Corp or give up 62.5% of portfolio value over 90 days.

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

Mammoth Resources Corp  vs.  Stampede Drilling

Mammoth Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mammoth Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mammoth Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Mammoth Resources and Stampede Drilling

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

The idea behind Mammoth Resources Corp and Stampede Drilling 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.