Correlation Between Boss Resources and CanAlaska Uranium

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

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

Diversification Opportunities for Boss Resources and CanAlaska Uranium

0.24

Correlation Coefficient

Boss Resources  CanAlaska Uranium

Modest diversification

The 3 months correlation between Boss and CanAlaska is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Boss Resources and CanAlaska Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanAlaska Uranium and Boss 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 Boss Resources are associated (or correlated) with CanAlaska Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanAlaska Uranium has no effect on the direction of Boss Resources i.e., Boss Resources and CanAlaska Uranium go up and down completely randomly.

Pair Corralation between Boss Resources and CanAlaska Uranium

Assuming the 90 days horizon Boss Resources is expected to under-perform the CanAlaska Uranium. In addition to that, Boss Resources is 1.13 times more volatile than CanAlaska Uranium. It trades about -0.07 of its total potential returns per unit of risk. CanAlaska Uranium is currently generating about 0.02 per unit of volatility. If you would invest  52.00  in CanAlaska Uranium on September 12, 2024 and sell it today you would earn a total of  1.00  from holding CanAlaska Uranium or generate 1.92% return on investment over 90 days.

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

Boss Resources  vs.  CanAlaska Uranium

Boss Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boss Resources 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CanAlaska Uranium

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Boss Resources and CanAlaska Uranium

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

The idea behind Boss Resources and CanAlaska Uranium 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.