Correlation Between Outcrop Gold and SKRR Exploration

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

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

Diversification Opportunities for Outcrop Gold and SKRR Exploration

0.32

Correlation Coefficient

Outcrop Gold  SKRR Exploration

Weak diversification

The 3 months correlation between Outcrop and SKRR is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Outcrop Gold Corp and SKRR Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKRR Exploration and Outcrop Gold 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 Outcrop Gold Corp are associated (or correlated) with SKRR Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKRR Exploration has no effect on the direction of Outcrop Gold i.e., Outcrop Gold and SKRR Exploration go up and down completely randomly.

Pair Corralation between Outcrop Gold and SKRR Exploration

Assuming the 90 days horizon Outcrop Gold Corp is expected to generate 0.75 times more return on investment than SKRR Exploration. However, Outcrop Gold Corp is 1.32 times less risky than SKRR Exploration. It trades about 0.01 of its potential returns per unit of risk. SKRR Exploration is currently generating about 0.0 per unit of risk. If you would invest  25.00  in Outcrop Gold Corp on September 23, 2024 and sell it today you would lose (5.00) from holding Outcrop Gold Corp or give up 20.0% of portfolio value over 90 days.

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

Outcrop Gold Corp  vs.  SKRR Exploration

Outcrop Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Outcrop Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Outcrop Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SKRR Exploration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SKRR Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SKRR Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outcrop Gold and SKRR Exploration

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

The idea behind Outcrop Gold Corp and SKRR Exploration 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.

Check out your portfolio center.

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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.