Correlation Between Palamina Corp and Labrador Gold

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

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

Diversification Opportunities for Palamina Corp and Labrador Gold

0.78

Correlation Coefficient

Palamina Corp  Labrador Gold

Poor diversification

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

Pair Corralation between Palamina Corp and Labrador Gold

Given the investment horizon of 90 days Palamina Corp is expected to under-perform the Labrador Gold. But the stock apears to be less risky and, when comparing its historical volatility, Palamina Corp is 1.92 times less risky than Labrador Gold. The stock trades about -0.25 of its potential returns per unit of risk. The Labrador Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Labrador Gold Corp on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Labrador Gold Corp or generate 0.0% return on investment over 90 days.

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

Palamina Corp  vs.  Labrador Gold Corp

Palamina Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Palamina Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Labrador Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Palamina Corp and Labrador Gold

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

The idea behind Palamina Corp and Labrador Gold 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 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.