Correlation Between McEwen Mining and Usha Resources

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

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

Diversification Opportunities for McEwen Mining and Usha Resources

-0.06

Correlation Coefficient

McEwen Mining  Usha Resources

Good diversification

The 3 months correlation between McEwen and Usha is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining and Usha Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usha Resources and McEwen 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 McEwen Mining are associated (or correlated) with Usha Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usha Resources has no effect on the direction of McEwen Mining i.e., McEwen Mining and Usha Resources go up and down completely randomly.

Pair Corralation between McEwen Mining and Usha Resources

Considering the 90-day investment horizon McEwen Mining is expected to generate 13.89 times less return on investment than Usha Resources. But when comparing it to its historical volatility, McEwen Mining is 4.0 times less risky than Usha Resources. It trades about 0.02 of its potential returns per unit of risk. Usha Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.20  in Usha Resources on December 18, 2024 and sell it today you would lose (0.04) from holding Usha Resources or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

McEwen Mining  vs.  Usha Resources

McEwen Mining

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in McEwen Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, McEwen Mining is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Usha Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usha Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Usha Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McEwen Mining and Usha Resources

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

The idea behind McEwen Mining and Usha 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.