Correlation Between Pampa Metals and Jervois Mining

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

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

Diversification Opportunities for Pampa Metals and Jervois Mining

-0.15

Correlation Coefficient

Pampa Metals  Jervois Mining

Good diversification

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

Pair Corralation between Pampa Metals and Jervois Mining

Assuming the 90 days horizon Pampa Metals is expected to generate 2.4 times more return on investment than Jervois Mining. However, Pampa Metals is 2.4 times more volatile than Jervois Mining. It trades about 0.04 of its potential returns per unit of risk. Jervois Mining is currently generating about 0.05 per unit of risk. If you would invest  13.00  in Pampa Metals on December 1, 2024 and sell it today you would lose (2.00) from holding Pampa Metals or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Pampa Metals  vs.  Jervois Mining

Pampa Metals

Risk-Adjusted Performance

Weak

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

Jervois Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jervois Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Jervois Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pampa Metals and Jervois Mining

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

The idea behind Pampa Metals and Jervois Mining 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.