Correlation Between Max Resource and Western Alaska

Can any of the company-specific risk be diversified away by investing in both Max Resource and Western Alaska 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 Max Resource and Western Alaska into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Max Resource and Western Alaska

0.03

Correlation Coefficient

Max Resource  Western Alaska

Significant diversification

The 3 months correlation between Max and Western is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Max Resource Corp and Western Alaska Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alaska Minerals and Max Resource 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 Max Resource Corp are associated (or correlated) with Western Alaska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alaska Minerals has no effect on the direction of Max Resource i.e., Max Resource and Western Alaska go up and down completely randomly.

Pair Corralation between Max Resource and Western Alaska

Assuming the 90 days horizon Max Resource is expected to generate 1.77 times less return on investment than Western Alaska. In addition to that, Max Resource is 1.09 times more volatile than Western Alaska Minerals. It trades about 0.05 of its total potential returns per unit of risk. Western Alaska Minerals is currently generating about 0.1 per unit of volatility. If you would invest  30.00  in Western Alaska Minerals on December 29, 2024 and sell it today you would earn a total of  11.00  from holding Western Alaska Minerals or generate 36.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Max Resource Corp  vs.  Western Alaska Minerals

Max Resource Corp

Risk-Adjusted Performance

Insignificant

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

Western Alaska Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Alaska Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Western Alaska reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Max Resource and Western Alaska

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

The idea behind Max Resource Corp and Western Alaska Minerals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.