Correlation Between Millrock Resources and Auxico Resources

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

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

Diversification Opportunities for Millrock Resources and Auxico Resources

-0.35

Correlation Coefficient

Millrock Resources  Auxico Resources

Very good diversification

The 3 months correlation between Millrock and Auxico is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Millrock Resources and Auxico Resources Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxico Resources Canada and Millrock 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 Millrock Resources are associated (or correlated) with Auxico Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxico Resources Canada has no effect on the direction of Millrock Resources i.e., Millrock Resources and Auxico Resources go up and down completely randomly.

Pair Corralation between Millrock Resources and Auxico Resources

If you would invest  1.10  in Auxico Resources Canada on September 12, 2024 and sell it today you would lose (0.50) from holding Auxico Resources Canada or give up 45.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Millrock Resources  vs.  Auxico Resources Canada

Millrock Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Auxico Resources Canada

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auxico Resources Canada are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Auxico Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Millrock Resources and Auxico Resources

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

The idea behind Millrock Resources and Auxico Resources Canada 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.