Correlation Between Puma Exploration and Tectonic Metals

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

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

Diversification Opportunities for Puma Exploration and Tectonic Metals

0.27

Correlation Coefficient

Puma Exploration  Tectonic Metals

Modest diversification

The 3 months correlation between Puma and Tectonic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Puma Exploration and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals and Puma Exploration 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 Puma Exploration are associated (or correlated) with Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of Puma Exploration i.e., Puma Exploration and Tectonic Metals go up and down completely randomly.

Pair Corralation between Puma Exploration and Tectonic Metals

Assuming the 90 days horizon Puma Exploration is expected to generate 2.02 times less return on investment than Tectonic Metals. In addition to that, Puma Exploration is 2.41 times more volatile than Tectonic Metals. It trades about 0.01 of its total potential returns per unit of risk. Tectonic Metals is currently generating about 0.05 per unit of volatility. If you would invest  3.65  in Tectonic Metals on November 20, 2024 and sell it today you would earn a total of  0.27  from holding Tectonic Metals or generate 7.4% return on investment over 90 days.

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

Puma Exploration  vs.  Tectonic Metals

Puma Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Puma Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Puma Exploration is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tectonic Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tectonic Metals may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Puma Exploration and Tectonic Metals

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

The idea behind Puma Exploration and Tectonic 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.

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 Stocks Directory module to find actively traded stocks across global markets.