Correlation Between Perpetua Resources and Bear Creek

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

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

Diversification Opportunities for Perpetua Resources and Bear Creek

0.93

Correlation Coefficient

Perpetua Resources  Bear Creek

Almost no diversification

The 3 months correlation between Perpetua and Bear is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Perpetua Resources Corp and Bear Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bear Creek Mining and Perpetua Resources 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 Perpetua Resources Corp are associated (or correlated) with Bear Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bear Creek Mining has no effect on the direction of Perpetua Resources i.e., Perpetua Resources and Bear Creek go up and down completely randomly.

Pair Corralation between Perpetua Resources and Bear Creek

Assuming the 90 days trading horizon Perpetua Resources Corp is expected to generate 1.22 times more return on investment than Bear Creek. However, Perpetua Resources is 1.22 times more volatile than Bear Creek Mining. It trades about 0.31 of its potential returns per unit of risk. Bear Creek Mining is currently generating about 0.31 per unit of risk. If you would invest  550.00  in Perpetua Resources Corp on January 20, 2024 and sell it today you would earn a total of  299.00  from holding Perpetua Resources Corp or generate 54.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Perpetua Resources Corp  vs.  Bear Creek Mining

Perpetua Resources Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetua Resources Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Perpetua Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Bear Creek Mining

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bear Creek Mining are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bear Creek showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perpetua Resources and Bear Creek

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

The idea behind Perpetua Resources Corp and Bear Creek Mining 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .