Correlation Between Tectonic Metals and Camino Minerals

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

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

Diversification Opportunities for Tectonic Metals and Camino Minerals

0.26

Correlation Coefficient

Tectonic Metals  Camino Minerals

Modest diversification

The 3 months correlation between Tectonic and Camino is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Metals and Camino Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camino Minerals and Tectonic Metals 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 Tectonic Metals are associated (or correlated) with Camino Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camino Minerals has no effect on the direction of Tectonic Metals i.e., Tectonic Metals and Camino Minerals go up and down completely randomly.

Pair Corralation between Tectonic Metals and Camino Minerals

Assuming the 90 days trading horizon Tectonic Metals is expected to under-perform the Camino Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Tectonic Metals is 1.2 times less risky than Camino Minerals. The stock trades about -0.02 of its potential returns per unit of risk. The Camino Minerals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Camino Minerals on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Camino Minerals or generate 0.0% return on investment over 90 days.

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

Tectonic Metals  vs.  Camino Minerals

Tectonic Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tectonic Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Camino Minerals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Camino Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Camino Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tectonic Metals and Camino Minerals

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

The idea behind Tectonic Metals and Camino 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.