Correlation Between Pason Systems and Endeavour Mining

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

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

Diversification Opportunities for Pason Systems and Endeavour Mining

-0.56

Correlation Coefficient

Pason Systems  Endeavour Mining

Excellent diversification

The 3 months correlation between Pason and Endeavour is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pason Systems and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp and Pason Systems 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 Pason Systems are associated (or correlated) with Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Pason Systems i.e., Pason Systems and Endeavour Mining go up and down completely randomly.

Pair Corralation between Pason Systems and Endeavour Mining

Assuming the 90 days trading horizon Pason Systems is expected to generate 0.65 times more return on investment than Endeavour Mining. However, Pason Systems is 1.55 times less risky than Endeavour Mining. It trades about 0.09 of its potential returns per unit of risk. Endeavour Mining Corp is currently generating about -0.01 per unit of risk. If you would invest  1,290  in Pason Systems on September 12, 2024 and sell it today you would earn a total of  123.00  from holding Pason Systems or generate 9.53% return on investment over 90 days.

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

Pason Systems  vs.  Endeavour Mining Corp

Pason Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pason Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Pason Systems may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Endeavour Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pason Systems and Endeavour Mining

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

The idea behind Pason Systems and Endeavour Mining 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.