Correlation Between Nevada King and Cantex Mine

Can any of the company-specific risk be diversified away by investing in both Nevada King and Cantex Mine 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 Nevada King and Cantex Mine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nevada King Gold and Cantex Mine Development, you can compare the effects of market volatilities on Nevada King and Cantex Mine 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 Nevada King with a short position of Cantex Mine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nevada King and Cantex Mine.

Diversification Opportunities for Nevada King and Cantex Mine

0.59

Correlation Coefficient

Nevada King  Cantex Mine

Very weak diversification

The 3 months correlation between Nevada and Cantex is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nevada King Gold and Cantex Mine Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantex Mine Development and Nevada King 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 Nevada King Gold are associated (or correlated) with Cantex Mine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantex Mine Development has no effect on the direction of Nevada King i.e., Nevada King and Cantex Mine go up and down completely randomly.

Pair Corralation between Nevada King and Cantex Mine

Assuming the 90 days horizon Nevada King Gold is expected to under-perform the Cantex Mine. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nevada King Gold is 1.07 times less risky than Cantex Mine. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Cantex Mine Development is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9.13  in Cantex Mine Development on September 11, 2024 and sell it today you would lose (0.07) from holding Cantex Mine Development or give up 0.77% of portfolio value over 90 days.

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

Nevada King Gold  vs.  Cantex Mine Development

Nevada King Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevada King Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Cantex Mine Development

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cantex Mine Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Cantex Mine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nevada King and Cantex Mine

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

The idea behind Nevada King Gold and Cantex Mine Development 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.