Correlation Between Prime Mining and Nevada King

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

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

Diversification Opportunities for Prime Mining and Nevada King

0.43

Correlation Coefficient

Prime Mining  Nevada King

Very weak diversification

The 3 months correlation between Prime and Nevada is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Prime Mining Corp and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold and Prime Mining 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 Prime Mining Corp are associated (or correlated) with Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of Prime Mining i.e., Prime Mining and Nevada King go up and down completely randomly.

Pair Corralation between Prime Mining and Nevada King

Assuming the 90 days horizon Prime Mining Corp is expected to generate 0.72 times more return on investment than Nevada King. However, Prime Mining Corp is 1.39 times less risky than Nevada King. It trades about 0.07 of its potential returns per unit of risk. Nevada King Gold is currently generating about 0.03 per unit of risk. If you would invest  98.00  in Prime Mining Corp on December 28, 2024 and sell it today you would earn a total of  14.00  from holding Prime Mining Corp or generate 14.29% return on investment over 90 days.

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

Prime Mining Corp  vs.  Nevada King Gold

Prime Mining Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Mining Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prime Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Nevada King Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nevada King Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nevada King may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Prime Mining and Nevada King

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

The idea behind Prime Mining Corp and Nevada King Gold 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 Transaction History module to view history of all your transactions and understand their impact on performance.