Correlation Between Outcrop Gold and Stillwater Critical

Can any of the company-specific risk be diversified away by investing in both Outcrop Gold and Stillwater Critical 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 Outcrop Gold and Stillwater Critical into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Outcrop Gold and Stillwater Critical

-0.15

Correlation Coefficient

Outcrop Gold  Stillwater Critical

Good diversification

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

Pair Corralation between Outcrop Gold and Stillwater Critical

Assuming the 90 days horizon Outcrop Gold Corp is expected to generate 0.91 times more return on investment than Stillwater Critical. However, Outcrop Gold Corp is 1.1 times less risky than Stillwater Critical. It trades about 0.06 of its potential returns per unit of risk. Stillwater Critical Minerals is currently generating about 0.03 per unit of risk. If you would invest  18.00  in Outcrop Gold Corp on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Outcrop Gold Corp or generate 11.11% return on investment over 90 days.

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

Outcrop Gold Corp  vs.  Stillwater Critical Minerals

Outcrop Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Outcrop Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Outcrop Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Stillwater Critical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stillwater Critical Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Stillwater Critical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outcrop Gold and Stillwater Critical

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

The idea behind Outcrop Gold Corp and Stillwater Critical 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.