Correlation Between Strategic Resources and Jervois Mining

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

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

Diversification Opportunities for Strategic Resources and Jervois Mining

0.08

Correlation Coefficient

Strategic Resources  Jervois Mining

Significant diversification

The 3 months correlation between Strategic and Jervois is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Resources and Jervois Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jervois Mining and Strategic Resources 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 Strategic Resources 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 Strategic Resources i.e., Strategic Resources and Jervois Mining go up and down completely randomly.

Pair Corralation between Strategic Resources and Jervois Mining

Assuming the 90 days horizon Strategic Resources is expected to under-perform the Jervois Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, Strategic Resources is 1.06 times less risky than Jervois Mining. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Jervois Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.80  in Jervois Mining on December 30, 2024 and sell it today you would earn a total of  0.06  from holding Jervois Mining or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Strategic Resources  vs.  Jervois Mining

Strategic Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Jervois Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jervois Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Jervois Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Strategic Resources and Jervois Mining

The main advantage of trading using opposite Strategic Resources and Jervois Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Resources 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 Strategic Resources 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.