Correlation Between Pinetree Capital and Laramide Resources

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

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

Diversification Opportunities for Pinetree Capital and Laramide Resources

0.3

Correlation Coefficient

Pinetree Capital  Laramide Resources

Weak diversification

The 3 months correlation between Pinetree and Laramide is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pinetree Capital and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources and Pinetree Capital 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 Pinetree Capital are associated (or correlated) with Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of Pinetree Capital i.e., Pinetree Capital and Laramide Resources go up and down completely randomly.

Pair Corralation between Pinetree Capital and Laramide Resources

Assuming the 90 days horizon Pinetree Capital is expected to generate 1.01 times less return on investment than Laramide Resources. In addition to that, Pinetree Capital is 1.13 times more volatile than Laramide Resources. It trades about 0.13 of its total potential returns per unit of risk. Laramide Resources is currently generating about 0.15 per unit of volatility. If you would invest  36.00  in Laramide Resources on September 14, 2024 and sell it today you would earn a total of  14.00  from holding Laramide Resources or generate 38.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Pinetree Capital  vs.  Laramide Resources

Pinetree Capital

Risk-Adjusted Performance

10 of 100

OK

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

Laramide Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laramide Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laramide Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinetree Capital and Laramide Resources

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

The idea behind Pinetree Capital and Laramide Resources 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..