Correlation Between New Pacific and Dynaresource

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

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

Diversification Opportunities for New Pacific and Dynaresource

-0.44

Correlation Coefficient

New Pacific  Dynaresource

Very good diversification

The 3 months correlation between New and Dynaresource is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding New Pacific Metals and Dynaresource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynaresource and New Pacific 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 New Pacific Metals are associated (or correlated) with Dynaresource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynaresource has no effect on the direction of New Pacific i.e., New Pacific and Dynaresource go up and down completely randomly.

Pair Corralation between New Pacific and Dynaresource

Given the investment horizon of 90 days New Pacific Metals is expected to generate 0.82 times more return on investment than Dynaresource. However, New Pacific Metals is 1.23 times less risky than Dynaresource. It trades about 0.0 of its potential returns per unit of risk. Dynaresource is currently generating about -0.01 per unit of risk. If you would invest  250.00  in New Pacific Metals on September 14, 2024 and sell it today you would lose (98.00) from holding New Pacific Metals or give up 39.2% of portfolio value over 90 days.

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

New Pacific Metals  vs.  Dynaresource

New Pacific Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Pacific Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, New Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Dynaresource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dynaresource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Dynaresource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with New Pacific and Dynaresource

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

The idea behind New Pacific Metals and Dynaresource 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.