Correlation Between CanAlaska Uranium and Skyharbour Resources

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

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

Diversification Opportunities for CanAlaska Uranium and Skyharbour Resources

0.65

Correlation Coefficient

CanAlaska Uranium  Skyharbour Resources

Poor diversification

The 3 months correlation between CanAlaska and Skyharbour is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CanAlaska Uranium and Skyharbour Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyharbour Resources and CanAlaska Uranium 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 CanAlaska Uranium are associated (or correlated) with Skyharbour Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyharbour Resources has no effect on the direction of CanAlaska Uranium i.e., CanAlaska Uranium and Skyharbour Resources go up and down completely randomly.

Pair Corralation between CanAlaska Uranium and Skyharbour Resources

Assuming the 90 days horizon CanAlaska Uranium is expected to generate 1.11 times less return on investment than Skyharbour Resources. But when comparing it to its historical volatility, CanAlaska Uranium is 1.24 times less risky than Skyharbour Resources. It trades about 0.07 of its potential returns per unit of risk. Skyharbour Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Skyharbour Resources on September 5, 2024 and sell it today you would earn a total of  3.00  from holding Skyharbour Resources or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

CanAlaska Uranium  vs.  Skyharbour Resources

CanAlaska Uranium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CanAlaska Uranium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CanAlaska Uranium reported solid returns over the last few months and may actually be approaching a breakup point.

Skyharbour Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skyharbour Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Skyharbour Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CanAlaska Uranium and Skyharbour Resources

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

The idea behind CanAlaska Uranium and Skyharbour Resources 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..