Correlation Between Palamina Corp and Heliostar Metals

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

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

Diversification Opportunities for Palamina Corp and Heliostar Metals

0.35

Correlation Coefficient

Palamina Corp  Heliostar Metals

Weak diversification

The 3 months correlation between Palamina and Heliostar is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and Heliostar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heliostar Metals 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 Heliostar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heliostar Metals has no effect on the direction of Palamina Corp i.e., Palamina Corp and Heliostar Metals go up and down completely randomly.

Pair Corralation between Palamina Corp and Heliostar Metals

Assuming the 90 days horizon Palamina Corp is expected to under-perform the Heliostar Metals. In addition to that, Palamina Corp is 1.22 times more volatile than Heliostar Metals. It trades about -0.07 of its total potential returns per unit of risk. Heliostar Metals is currently generating about 0.12 per unit of volatility. If you would invest  41.00  in Heliostar Metals on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Heliostar Metals or generate 12.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Palamina Corp  vs.  Heliostar Metals

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. Despite nearly stable basic indicators, Palamina Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Heliostar Metals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heliostar Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heliostar Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palamina Corp and Heliostar Metals

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

The idea behind Palamina Corp and Heliostar Metals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.