Correlation Between Stelmine Canada and Pacific Ridge

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

By analyzing existing cross correlation between Stelmine Canada and Pacific Ridge Exploration, you can compare the effects of market volatilities on Stelmine Canada and Pacific Ridge 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 Pacific Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelmine Canada and Pacific Ridge.

Diversification Opportunities for Stelmine Canada and Pacific Ridge

-0.03

Correlation Coefficient

Stelmine Canada  Pacific Ridge

Good diversification

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

Pair Corralation between Stelmine Canada and Pacific Ridge

If you would invest  2.00  in Pacific Ridge Exploration on October 20, 2024 and sell it today you would earn a total of  0.50  from holding Pacific Ridge Exploration or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Stelmine Canada  vs.  Pacific Ridge Exploration

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.

Pacific Ridge Exploration

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Ridge Exploration are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pacific Ridge showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stelmine Canada and Pacific Ridge

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

The idea behind Stelmine Canada and Pacific Ridge Exploration 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.