Correlation Between Chibougamau Independent and Solitario Exploration

Can any of the company-specific risk be diversified away by investing in both Chibougamau Independent and Solitario Exploration 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 Solitario Exploration 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 Solitario Exploration Royalty, you can compare the effects of market volatilities on Chibougamau Independent and Solitario Exploration 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 Solitario Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chibougamau Independent and Solitario Exploration.

Diversification Opportunities for Chibougamau Independent and Solitario Exploration

-0.58

Correlation Coefficient

Chibougamau Independent  Solitario Exploration

Excellent diversification

The 3 months correlation between Chibougamau and Solitario is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chibougamau Independent Mines and Solitario Exploration Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solitario Exploration 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 Solitario Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solitario Exploration has no effect on the direction of Chibougamau Independent i.e., Chibougamau Independent and Solitario Exploration go up and down completely randomly.

Pair Corralation between Chibougamau Independent and Solitario Exploration

Assuming the 90 days horizon Chibougamau Independent Mines is expected to generate 1.74 times more return on investment than Solitario Exploration. However, Chibougamau Independent is 1.74 times more volatile than Solitario Exploration Royalty. It trades about 0.13 of its potential returns per unit of risk. Solitario Exploration Royalty is currently generating about -0.01 per unit of risk. If you would invest  10.00  in Chibougamau Independent Mines on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Chibougamau Independent Mines or generate 40.0% return on investment over 90 days.

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

Chibougamau Independent Mines  vs.  Solitario Exploration Royalty

Chibougamau Independent

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chibougamau Independent Mines are ranked lower than 10 (%) 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.

Solitario Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solitario Exploration Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Solitario Exploration is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Chibougamau Independent and Solitario Exploration

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

The idea behind Chibougamau Independent Mines and Solitario Exploration Royalty 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.