Correlation Between Commerce Resources and Strategic Metals

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

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

Diversification Opportunities for Commerce Resources and Strategic Metals

0.18

Correlation Coefficient

Commerce Resources  Strategic Metals

Average diversification

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

Pair Corralation between Commerce Resources and Strategic Metals

Assuming the 90 days horizon Commerce Resources is expected to generate 1.92 times less return on investment than Strategic Metals. In addition to that, Commerce Resources is 1.92 times more volatile than Strategic Metals. It trades about 0.01 of its total potential returns per unit of risk. Strategic Metals is currently generating about 0.03 per unit of volatility. If you would invest  11.00  in Strategic Metals on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Strategic Metals or generate 0.0% return on investment over 90 days.

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

Commerce Resources Corp  vs.  Strategic Metals

Commerce Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commerce Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Commerce Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Strategic Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Strategic Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Commerce Resources and Strategic Metals

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

The idea behind Commerce Resources Corp and Strategic 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.