Correlation Between Foran Mining and Calibre Mining

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

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

Diversification Opportunities for Foran Mining and Calibre Mining

0.38

Correlation Coefficient

Foran Mining  Calibre Mining

Weak diversification

The 3 months correlation between Foran and Calibre is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Foran Mining and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp and Foran 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 Foran Mining are associated (or correlated) with Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of Foran Mining i.e., Foran Mining and Calibre Mining go up and down completely randomly.

Pair Corralation between Foran Mining and Calibre Mining

Assuming the 90 days trading horizon Foran Mining is expected to generate 2.74 times less return on investment than Calibre Mining. But when comparing it to its historical volatility, Foran Mining is 1.28 times less risky than Calibre Mining. It trades about 0.04 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Calibre Mining Corp on September 5, 2024 and sell it today you would earn a total of  166.00  from holding Calibre Mining Corp or generate 202.44% return on investment over 90 days.

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

Foran Mining  vs.  Calibre Mining Corp

Foran Mining

Risk-Adjusted Performance

8 of 100

OK

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

Calibre Mining Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Calibre Mining Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Calibre Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Foran Mining and Calibre Mining

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

The idea behind Foran Mining and Calibre Mining Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .