Correlation Between Bear Creek and Arras Minerals

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

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

Diversification Opportunities for Bear Creek and Arras Minerals

-0.46

Correlation Coefficient

Bear Creek  Arras Minerals

Very good diversification

The 3 months correlation between Bear and Arras is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bear Creek Mining and Arras Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arras Minerals Corp and Bear Creek 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 Bear Creek Mining are associated (or correlated) with Arras Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arras Minerals Corp has no effect on the direction of Bear Creek i.e., Bear Creek and Arras Minerals go up and down completely randomly.

Pair Corralation between Bear Creek and Arras Minerals

Assuming the 90 days horizon Bear Creek Mining is expected to generate 0.97 times more return on investment than Arras Minerals. However, Bear Creek Mining is 1.04 times less risky than Arras Minerals. It trades about 0.08 of its potential returns per unit of risk. Arras Minerals Corp is currently generating about 0.05 per unit of risk. If you would invest  14.00  in Bear Creek Mining on September 14, 2024 and sell it today you would earn a total of  17.00  from holding Bear Creek Mining or generate 121.43% return on investment over 90 days.

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

Bear Creek Mining  vs.  Arras Minerals Corp

Bear Creek Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bear Creek Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Bear Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Arras Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arras Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bear Creek and Arras Minerals

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

The idea behind Bear Creek Mining and Arras Minerals 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.