Correlation Between Solitario Exploration and Chibougamau Independent

Can any of the company-specific risk be diversified away by investing in both Solitario Exploration and Chibougamau Independent 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 Solitario Exploration and Chibougamau Independent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solitario Exploration Royalty and Chibougamau Independent Mines, you can compare the effects of market volatilities on Solitario Exploration and Chibougamau Independent 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 Solitario Exploration with a short position of Chibougamau Independent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solitario Exploration and Chibougamau Independent.

Diversification Opportunities for Solitario Exploration and Chibougamau Independent

-0.58

Correlation Coefficient

Solitario Exploration  Chibougamau Independent

Excellent diversification

The 3 months correlation between Solitario and Chibougamau is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Solitario Exploration Royalty and Chibougamau Independent Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chibougamau Independent and Solitario Exploration 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 Solitario Exploration Royalty are associated (or correlated) with Chibougamau Independent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chibougamau Independent has no effect on the direction of Solitario Exploration i.e., Solitario Exploration and Chibougamau Independent go up and down completely randomly.

Pair Corralation between Solitario Exploration and Chibougamau Independent

Assuming the 90 days trading horizon Solitario Exploration Royalty is expected to under-perform the Chibougamau Independent. But the stock apears to be less risky and, when comparing its historical volatility, Solitario Exploration Royalty is 1.74 times less risky than Chibougamau Independent. The stock trades about -0.01 of its potential returns per unit of risk. The Chibougamau Independent Mines is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Chibougamau Independent Mines on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Chibougamau Independent Mines or generate 40.0% return on investment over 90 days.

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

Solitario Exploration Royalty  vs.  Chibougamau Independent Mines

Solitario Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chibougamau Independent

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chibougamau Independent Mines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chibougamau Independent showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solitario Exploration and Chibougamau Independent

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

The idea behind Solitario Exploration Royalty and Chibougamau Independent Mines 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.