Correlation Between Chibougamau Independent and Monument Mining

Can any of the company-specific risk be diversified away by investing in both Chibougamau Independent and Monument Mining 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 Chibougamau Independent and Monument Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chibougamau Independent Mines and Monument Mining Limited, you can compare the effects of market volatilities on Chibougamau Independent and Monument Mining 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 Chibougamau Independent with a short position of Monument Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chibougamau Independent and Monument Mining.

Diversification Opportunities for Chibougamau Independent and Monument Mining

0.73

Correlation Coefficient

Chibougamau Independent  Monument Mining

Poor diversification

The 3 months correlation between Chibougamau and Monument is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chibougamau Independent Mines and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining and Chibougamau Independent 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 Chibougamau Independent Mines are associated (or correlated) with Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Chibougamau Independent i.e., Chibougamau Independent and Monument Mining go up and down completely randomly.

Pair Corralation between Chibougamau Independent and Monument Mining

Assuming the 90 days horizon Chibougamau Independent Mines is expected to generate 1.25 times more return on investment than Monument Mining. However, Chibougamau Independent is 1.25 times more volatile than Monument Mining Limited. It trades about 0.11 of its potential returns per unit of risk. Monument Mining Limited is currently generating about 0.1 per unit of risk. If you would invest  10.00  in Chibougamau Independent Mines on September 29, 2024 and sell it today you would earn a total of  3.00  from holding Chibougamau Independent Mines or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Chibougamau Independent Mines  vs.  Monument Mining Limited

Chibougamau Independent

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chibougamau Independent Mines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chibougamau Independent showed solid returns over the last few months and may actually be approaching a breakup point.

Monument Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Monument Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chibougamau Independent and Monument Mining

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

The idea behind Chibougamau Independent Mines and Monument Mining Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.