Correlation Between Texas Rare and Artemis Resources

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

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

Diversification Opportunities for Texas Rare and Artemis Resources

0.64

Correlation Coefficient

Texas Rare  Artemis Resources

Poor diversification

The 3 months correlation between Texas and Artemis is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Texas Rare Earth and Artemis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artemis Resources and Texas Rare 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 Texas Rare Earth are associated (or correlated) with Artemis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artemis Resources has no effect on the direction of Texas Rare i.e., Texas Rare and Artemis Resources go up and down completely randomly.

Pair Corralation between Texas Rare and Artemis Resources

Given the investment horizon of 90 days Texas Rare Earth is expected to under-perform the Artemis Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Texas Rare Earth is 7.73 times less risky than Artemis Resources. The otc stock trades about -0.01 of its potential returns per unit of risk. The Artemis Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.30  in Artemis Resources on August 31, 2024 and sell it today you would lose (0.80) from holding Artemis Resources or give up 61.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Texas Rare Earth  vs.  Artemis Resources

Texas Rare Earth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Rare Earth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Texas Rare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Artemis Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artemis Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Artemis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Texas Rare and Artemis Resources

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

The idea behind Texas Rare Earth and Artemis 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.