Correlation Between Kootenay Silver and Bear Creek

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

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

Diversification Opportunities for Kootenay Silver and Bear Creek

0.78

Correlation Coefficient

Kootenay Silver  Bear Creek

Poor diversification

The 3 months correlation between Kootenay and Bear is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kootenay Silver and Bear Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bear Creek Mining and Kootenay Silver 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 Kootenay Silver are associated (or correlated) with Bear Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bear Creek Mining has no effect on the direction of Kootenay Silver i.e., Kootenay Silver and Bear Creek go up and down completely randomly.

Pair Corralation between Kootenay Silver and Bear Creek

Assuming the 90 days horizon Kootenay Silver is expected to under-perform the Bear Creek. But the stock apears to be less risky and, when comparing its historical volatility, Kootenay Silver is 1.66 times less risky than Bear Creek. The stock trades about -0.02 of its potential returns per unit of risk. The Bear Creek Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Bear Creek Mining on September 13, 2024 and sell it today you would earn a total of  7.00  from holding Bear Creek Mining or generate 19.44% return on investment over 90 days.

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

Kootenay Silver  vs.  Bear Creek Mining

Kootenay Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kootenay Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kootenay Silver is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bear Creek Mining

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Kootenay Silver and Bear Creek

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

The idea behind Kootenay Silver and Bear Creek Mining 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.