Correlation Between Tinka Resources and Avrupa Minerals

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

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

Diversification Opportunities for Tinka Resources and Avrupa Minerals

0.03

Correlation Coefficient

Tinka Resources  Avrupa Minerals

Significant diversification

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

Pair Corralation between Tinka Resources and Avrupa Minerals

Assuming the 90 days horizon Tinka Resources Limited is expected to under-perform the Avrupa Minerals. But the otc stock apears to be less risky and, when comparing its historical volatility, Tinka Resources Limited is 1.15 times less risky than Avrupa Minerals. The otc stock trades about -0.07 of its potential returns per unit of risk. The Avrupa Minerals is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Avrupa Minerals on December 28, 2024 and sell it today you would lose (0.45) from holding Avrupa Minerals or give up 45.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Tinka Resources Limited  vs.  Avrupa Minerals

Tinka Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tinka Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Avrupa Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avrupa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Tinka Resources and Avrupa Minerals

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

The idea behind Tinka Resources Limited and Avrupa 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.