Correlation Between Black Tusk and Heliostar Metals

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

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

Diversification Opportunities for Black Tusk and Heliostar Metals

-0.26

Correlation Coefficient

Black Tusk  Heliostar Metals

Very good diversification

The 3 months correlation between Black and Heliostar is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Black Tusk Resources and Heliostar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heliostar Metals and Black Tusk 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 Black Tusk Resources are associated (or correlated) with Heliostar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heliostar Metals has no effect on the direction of Black Tusk i.e., Black Tusk and Heliostar Metals go up and down completely randomly.

Pair Corralation between Black Tusk and Heliostar Metals

Assuming the 90 days horizon Black Tusk Resources is expected to generate 57.41 times more return on investment than Heliostar Metals. However, Black Tusk is 57.41 times more volatile than Heliostar Metals. It trades about 0.44 of its potential returns per unit of risk. Heliostar Metals is currently generating about 0.15 per unit of risk. If you would invest  0.76  in Black Tusk Resources on September 15, 2024 and sell it today you would earn a total of  6.24  from holding Black Tusk Resources or generate 821.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.31%
Values	Daily Returns

Black Tusk Resources  vs.  Heliostar Metals

Black Tusk Resources

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Black Tusk Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Black Tusk reported solid returns over the last few months and may actually be approaching a breakup point.

Heliostar Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heliostar Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heliostar Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Tusk and Heliostar Metals

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

The idea behind Black Tusk Resources and Heliostar 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 Global Correlations module to find global opportunities by holding instruments from different markets.