Correlation Between Calibre Mining and NAGOYA RAILROAD

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

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

Diversification Opportunities for Calibre Mining and NAGOYA RAILROAD

-0.31

Correlation Coefficient

Calibre Mining  NAGOYA RAILROAD

Very good diversification

The 3 months correlation between Calibre and NAGOYA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Calibre Mining Corp and NAGOYA RAILROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAGOYA RAILROAD and Calibre Mining 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 Calibre Mining Corp are associated (or correlated) with NAGOYA RAILROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAGOYA RAILROAD has no effect on the direction of Calibre Mining i.e., Calibre Mining and NAGOYA RAILROAD go up and down completely randomly.

Pair Corralation between Calibre Mining and NAGOYA RAILROAD

Assuming the 90 days trading horizon Calibre Mining Corp is expected to generate 1.9 times more return on investment than NAGOYA RAILROAD. However, Calibre Mining is 1.9 times more volatile than NAGOYA RAILROAD. It trades about 0.06 of its potential returns per unit of risk. NAGOYA RAILROAD is currently generating about -0.04 per unit of risk. If you would invest  73.00  in Calibre Mining Corp on October 4, 2024 and sell it today you would earn a total of  68.00  from holding Calibre Mining Corp or generate 93.15% return on investment over 90 days.

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

Calibre Mining Corp  vs.  NAGOYA RAILROAD

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NAGOYA RAILROAD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NAGOYA RAILROAD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NAGOYA RAILROAD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Calibre Mining and NAGOYA RAILROAD

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

The idea behind Calibre Mining Corp and NAGOYA RAILROAD 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.