Correlation Between Prom Resources and North Bay

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

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

Diversification Opportunities for Prom Resources and North Bay

0.39

Correlation Coefficient

Prom Resources  North Bay

Weak diversification

The 3 months correlation between Prom and North is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Prom Resources and North Bay Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Bay Resources and Prom Resources 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 Prom Resources are associated (or correlated) with North Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Bay Resources has no effect on the direction of Prom Resources i.e., Prom Resources and North Bay go up and down completely randomly.

Pair Corralation between Prom Resources and North Bay

If you would invest  0.01  in Prom Resources on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Prom Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Prom Resources  vs.  North Bay Resources

Prom Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prom Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Prom Resources is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

North Bay Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in North Bay Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, North Bay demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prom Resources and North Bay

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

The idea behind Prom Resources and North Bay 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.