Correlation Between American Pacific and Radisson Mining

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

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

Diversification Opportunities for American Pacific and Radisson Mining

-0.08

Correlation Coefficient

American Pacific  Radisson Mining

Good diversification

The 3 months correlation between American and Radisson is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding American Pacific Mining and Radisson Mining Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radisson Mining Resources and American Pacific 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 American Pacific Mining are associated (or correlated) with Radisson Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radisson Mining Resources has no effect on the direction of American Pacific i.e., American Pacific and Radisson Mining go up and down completely randomly.

Pair Corralation between American Pacific and Radisson Mining

Assuming the 90 days horizon American Pacific Mining is expected to generate 2.3 times more return on investment than Radisson Mining. However, American Pacific is 2.3 times more volatile than Radisson Mining Resources. It trades about 0.33 of its potential returns per unit of risk. Radisson Mining Resources is currently generating about -0.15 per unit of risk. If you would invest  8.31  in American Pacific Mining on August 31, 2024 and sell it today you would earn a total of  8.69  from holding American Pacific Mining or generate 104.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

American Pacific Mining  vs.  Radisson Mining Resources

American Pacific Mining

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Pacific Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, American Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Radisson Mining Resources

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radisson Mining Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Radisson Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Pacific and Radisson Mining

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

The idea behind American Pacific Mining and Radisson Mining 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.