Correlation Between Puma Exploration and Avarone Metals

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

By analyzing existing cross correlation between Puma Exploration and Avarone Metals, you can compare the effects of market volatilities on Puma Exploration and Avarone Metals 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 Puma Exploration with a short position of Avarone Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Exploration and Avarone Metals.

Diversification Opportunities for Puma Exploration and Avarone Metals

-0.21

Correlation Coefficient

Puma Exploration  Avarone Metals

Very good diversification

The 3 months correlation between Puma and Avarone is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Puma Exploration and Avarone Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avarone Metals and Puma Exploration 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 Puma Exploration are associated (or correlated) with Avarone Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avarone Metals has no effect on the direction of Puma Exploration i.e., Puma Exploration and Avarone Metals go up and down completely randomly.

Pair Corralation between Puma Exploration and Avarone Metals

Assuming the 90 days horizon Puma Exploration is expected to generate 29.32 times less return on investment than Avarone Metals. In addition to that, Puma Exploration is 2.15 times more volatile than Avarone Metals. It trades about 0.0 of its total potential returns per unit of risk. Avarone Metals is currently generating about 0.13 per unit of volatility. If you would invest  2.02  in Avarone Metals on March 17, 2024 and sell it today you would earn a total of  0.47  from holding Avarone Metals or generate 23.27% return on investment over 90 days.

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

Puma Exploration  vs.  Avarone Metals

Puma Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puma Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Puma Exploration is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Avarone Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avarone Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Avarone Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Puma Exploration and Avarone Metals

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

The idea behind Puma Exploration and Avarone Metals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.