Correlation Between Chalice Mining and Resource Base

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

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

Diversification Opportunities for Chalice Mining and Resource Base

-0.18

Correlation Coefficient

Chalice Mining  Resource Base

Good diversification

The 3 months correlation between Chalice and Resource is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base and Chalice Mining 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 Chalice Mining Limited are associated (or correlated) with Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Chalice Mining i.e., Chalice Mining and Resource Base go up and down completely randomly.

Pair Corralation between Chalice Mining and Resource Base

Assuming the 90 days trading horizon Chalice Mining Limited is expected to generate 1.1 times more return on investment than Resource Base. However, Chalice Mining is 1.1 times more volatile than Resource Base. It trades about 0.11 of its potential returns per unit of risk. Resource Base is currently generating about 0.07 per unit of risk. If you would invest  103.00  in Chalice Mining Limited on August 31, 2024 and sell it today you would earn a total of  31.00  from holding Chalice Mining Limited or generate 30.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Chalice Mining Limited  vs.  Resource Base

Chalice Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chalice Mining Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chalice Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Resource Base

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resource Base are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Resource Base unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chalice Mining and Resource Base

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

The idea behind Chalice Mining Limited and Resource Base 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.