Correlation Between Western Alaska and Max Resource

Can any of the company-specific risk be diversified away by investing in both Western Alaska and Max Resource 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 Western Alaska and Max Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Western Alaska and Max Resource

0.63

Correlation Coefficient

Western Alaska  Max Resource

Poor diversification

The 3 months correlation between Western and Max is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Western Alaska Minerals and Max Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Resource Corp and Western Alaska 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 Western Alaska Minerals are associated (or correlated) with Max Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Resource Corp has no effect on the direction of Western Alaska i.e., Western Alaska and Max Resource go up and down completely randomly.

Pair Corralation between Western Alaska and Max Resource

Assuming the 90 days horizon Western Alaska Minerals is expected to under-perform the Max Resource. But the pink sheet apears to be less risky and, when comparing its historical volatility, Western Alaska Minerals is 1.32 times less risky than Max Resource. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Max Resource Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Max Resource Corp on September 14, 2024 and sell it today you would lose (1.65) from holding Max Resource Corp or give up 33.0% of portfolio value over 90 days.

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

Western Alaska Minerals  vs.  Max Resource Corp

Western Alaska Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Alaska 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Max Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Max Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Western Alaska and Max Resource

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

The idea behind Western Alaska Minerals and Max Resource Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.