Correlation Between Palamina Corp and Tesoro Minerals

Can any of the company-specific risk be diversified away by investing in both Palamina Corp and Tesoro Minerals 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 Palamina Corp and Tesoro Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Palamina Corp and Tesoro Minerals

0.22

Correlation Coefficient

Palamina Corp  Tesoro Minerals

Modest diversification

The 3 months correlation between Palamina and Tesoro is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and Tesoro Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesoro Minerals Corp and Palamina Corp 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 Palamina Corp are associated (or correlated) with Tesoro Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesoro Minerals Corp has no effect on the direction of Palamina Corp i.e., Palamina Corp and Tesoro Minerals go up and down completely randomly.

Pair Corralation between Palamina Corp and Tesoro Minerals

Given the investment horizon of 90 days Palamina Corp is expected to generate 45.06 times less return on investment than Tesoro Minerals. But when comparing it to its historical volatility, Palamina Corp is 2.15 times less risky than Tesoro Minerals. It trades about 0.0 of its potential returns per unit of risk. Tesoro Minerals Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Tesoro Minerals Corp on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Tesoro Minerals Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Palamina Corp  vs.  Tesoro Minerals Corp

Palamina Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tesoro Minerals Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tesoro Minerals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Tesoro Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palamina Corp and Tesoro Minerals

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

The idea behind Palamina Corp and Tesoro Minerals Corp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.