Correlation Between Posera and Searchlight Minerals

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

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

Diversification Opportunities for Posera and Searchlight Minerals

0.62

Correlation Coefficient

Posera  Searchlight Minerals

Poor diversification

The 3 months correlation between Posera and Searchlight is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Posera and Searchlight Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Minerals Corp and Posera 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 Posera are associated (or correlated) with Searchlight Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Minerals Corp has no effect on the direction of Posera i.e., Posera and Searchlight Minerals go up and down completely randomly.

Pair Corralation between Posera and Searchlight Minerals

Assuming the 90 days horizon Posera is expected to under-perform the Searchlight Minerals. But the otc stock apears to be less risky and, when comparing its historical volatility, Posera is 2.91 times less risky than Searchlight Minerals. The otc stock trades about -0.18 of its potential returns per unit of risk. The Searchlight Minerals Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.27  in Searchlight Minerals Corp on October 27, 2024 and sell it today you would earn a total of  0.13  from holding Searchlight Minerals Corp or generate 48.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Posera  vs.  Searchlight Minerals Corp

Posera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Posera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Searchlight Minerals Corp

Risk-Adjusted Performance

5 of 100

Insignificant

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

Pair Trading with Posera and Searchlight Minerals

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

The idea behind Posera and Searchlight 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.