Correlation Between Apex Mining and Semirara Mining

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

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

Diversification Opportunities for Apex Mining and Semirara Mining

0.37

Correlation Coefficient

Apex Mining  Semirara Mining

Weak diversification

The 3 months correlation between Apex and Semirara is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Apex Mining Co and Semirara Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semirara Mining Corp and Apex 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 Apex Mining Co are associated (or correlated) with Semirara Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semirara Mining Corp has no effect on the direction of Apex Mining i.e., Apex Mining and Semirara Mining go up and down completely randomly.

Pair Corralation between Apex Mining and Semirara Mining

Assuming the 90 days trading horizon Apex Mining Co is expected to generate 1.34 times more return on investment than Semirara Mining. However, Apex Mining is 1.34 times more volatile than Semirara Mining Corp. It trades about 0.35 of its potential returns per unit of risk. Semirara Mining Corp is currently generating about 0.05 per unit of risk. If you would invest  253.00  in Apex Mining Co on March 4, 2024 and sell it today you would earn a total of  155.00  from holding Apex Mining Co or generate 61.26% return on investment over 90 days.

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

Apex Mining Co  vs.  Semirara Mining Corp

Apex Mining

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Mining Co are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Apex Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Semirara Mining Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Semirara Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Semirara Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apex Mining and Semirara Mining

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

The idea behind Apex Mining Co and Semirara Mining 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..