Correlation Between Power Metal and Eastinco Mining

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

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

Diversification Opportunities for Power Metal and Eastinco Mining

-0.01

Correlation Coefficient

Power Metal  Eastinco Mining

Good diversification

The 3 months correlation between Power and Eastinco is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Power Metal 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 Power Metal Resources are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Power Metal i.e., Power Metal and Eastinco Mining go up and down completely randomly.

Pair Corralation between Power Metal and Eastinco Mining

Assuming the 90 days trading horizon Power Metal Resources is expected to under-perform the Eastinco Mining. In addition to that, Power Metal is 1.16 times more volatile than Eastinco Mining Exploration. It trades about -0.05 of its total potential returns per unit of risk. Eastinco Mining Exploration is currently generating about 0.03 per unit of volatility. If you would invest  5,100  in Eastinco Mining Exploration on November 29, 2024 and sell it today you would earn a total of  150.00  from holding Eastinco Mining Exploration or generate 2.94% return on investment over 90 days.

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

Power Metal Resources  vs.  Eastinco Mining Exploration

Power Metal Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Metal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Eastinco Mining Expl

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastinco Mining Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Eastinco Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Power Metal and Eastinco Mining

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

The idea behind Power Metal Resources and Eastinco Mining Exploration 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.