Correlation Between Stampede Drilling and Plata Latina

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

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

Diversification Opportunities for Stampede Drilling and Plata Latina

-0.03

Correlation Coefficient

Stampede Drilling  Plata Latina

Good diversification

The 3 months correlation between Stampede and Plata is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Plata Latina Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plata Latina Minerals and Stampede Drilling 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 Stampede Drilling are associated (or correlated) with Plata Latina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plata Latina Minerals has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Plata Latina go up and down completely randomly.

Pair Corralation between Stampede Drilling and Plata Latina

Assuming the 90 days horizon Stampede Drilling is expected to under-perform the Plata Latina. But the stock apears to be less risky and, when comparing its historical volatility, Stampede Drilling is 9.37 times less risky than Plata Latina. The stock trades about -0.09 of its potential returns per unit of risk. The Plata Latina Minerals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Plata Latina Minerals on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Plata Latina Minerals or generate 0.0% return on investment over 90 days.

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

Stampede Drilling  vs.  Plata Latina Minerals

Stampede Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stampede Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Plata Latina Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plata Latina Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Plata Latina showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stampede Drilling and Plata Latina

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

The idea behind Stampede Drilling and Plata Latina Minerals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.