Correlation Between Sienna Resources and Prime Mining

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

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

Diversification Opportunities for Sienna Resources and Prime Mining

0.15

Correlation Coefficient

Sienna Resources  Prime Mining

Average diversification

The 3 months correlation between Sienna and Prime is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Resources and Prime Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Mining Corp and Sienna 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 Sienna Resources are associated (or correlated) with Prime Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Mining Corp has no effect on the direction of Sienna Resources i.e., Sienna Resources and Prime Mining go up and down completely randomly.

Pair Corralation between Sienna Resources and Prime Mining

Assuming the 90 days horizon Sienna Resources is expected to under-perform the Prime Mining. In addition to that, Sienna Resources is 1.19 times more volatile than Prime Mining Corp. It trades about -0.04 of its total potential returns per unit of risk. Prime Mining Corp is currently generating about 0.0 per unit of volatility. If you would invest  118.00  in Prime Mining Corp on September 3, 2024 and sell it today you would lose (11.00) from holding Prime Mining Corp or give up 9.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Sienna Resources  vs.  Prime Mining Corp

Sienna Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sienna Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Sienna Resources and Prime Mining

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

The idea behind Sienna Resources and Prime 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.