Correlation Between Prime Mining and Aftermath Silver

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

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

Diversification Opportunities for Prime Mining and Aftermath Silver

0.66

Correlation Coefficient

Prime Mining  Aftermath Silver

Poor diversification

The 3 months correlation between Prime and Aftermath is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Prime Mining Corp and Aftermath Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermath Silver and Prime Mining 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 Prime Mining Corp are associated (or correlated) with Aftermath Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermath Silver has no effect on the direction of Prime Mining i.e., Prime Mining and Aftermath Silver go up and down completely randomly.

Pair Corralation between Prime Mining and Aftermath Silver

Assuming the 90 days horizon Prime Mining is expected to generate 29.41 times less return on investment than Aftermath Silver. In addition to that, Prime Mining is 1.01 times more volatile than Aftermath Silver. It trades about 0.0 of its total potential returns per unit of risk. Aftermath Silver is currently generating about 0.14 per unit of volatility. If you would invest  23.00  in Aftermath Silver on September 3, 2024 and sell it today you would earn a total of  12.00  from holding Aftermath Silver or generate 52.17% return on investment over 90 days.

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

Prime Mining Corp  vs.  Aftermath Silver

Prime Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aftermath Silver

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Prime Mining and Aftermath Silver

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

The idea behind Prime Mining Corp and Aftermath Silver 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.