Correlation Between Stelmine Canada and Commander Resources

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

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

Diversification Opportunities for Stelmine Canada and Commander Resources

-0.05

Correlation Coefficient

Stelmine Canada  Commander Resources

Good diversification

The 3 months correlation between Stelmine and Commander is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stelmine Canada and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources and Stelmine Canada 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 Stelmine Canada are associated (or correlated) with Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of Stelmine Canada i.e., Stelmine Canada and Commander Resources go up and down completely randomly.

Pair Corralation between Stelmine Canada and Commander Resources

Assuming the 90 days horizon Stelmine Canada is expected to under-perform the Commander Resources. In addition to that, Stelmine Canada is 1.2 times more volatile than Commander Resources. It trades about -0.01 of its total potential returns per unit of risk. Commander Resources is currently generating about 0.03 per unit of volatility. If you would invest  8.00  in Commander Resources on October 7, 2024 and sell it today you would lose (0.50) from holding Commander Resources or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Stelmine Canada  vs.  Commander Resources

Stelmine Canada

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stelmine Canada are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Stelmine Canada showed solid returns over the last few months and may actually be approaching a breakup point.

Commander Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commander Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Commander Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stelmine Canada and Commander Resources

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

The idea behind Stelmine Canada and Commander Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.