Correlation Between Prime Mining and Minsud Resources

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

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

Diversification Opportunities for Prime Mining and Minsud Resources

0.06

Correlation Coefficient

Prime Mining  Minsud Resources

Significant diversification

The 3 months correlation between Prime and Minsud is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Prime Mining Corp and Minsud Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minsud Resources Corp and Prime 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 Prime Mining Corp are associated (or correlated) with Minsud Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minsud Resources Corp has no effect on the direction of Prime Mining i.e., Prime Mining and Minsud Resources go up and down completely randomly.

Pair Corralation between Prime Mining and Minsud Resources

Assuming the 90 days horizon Prime Mining Corp is expected to generate 0.24 times more return on investment than Minsud Resources. However, Prime Mining Corp is 4.25 times less risky than Minsud Resources. It trades about 0.08 of its potential returns per unit of risk. Minsud Resources Corp is currently generating about -0.22 per unit of risk. If you would invest  155.00  in Prime Mining Corp on March 5, 2024 and sell it today you would earn a total of  9.00  from holding Prime Mining Corp or generate 5.81% return on investment over 90 days.

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

Prime Mining Corp  vs.  Minsud Resources Corp

Prime Mining Corp

Risk-Adjusted Performance

1 of 100

Weak

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

Minsud Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minsud Resources Corp 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 basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Prime Mining and Minsud Resources

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

The idea behind Prime Mining Corp and Minsud Resources 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.