Correlation Between ZincX Resources and VR Resources

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

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

Diversification Opportunities for ZincX Resources and VR Resources

0.33

Correlation Coefficient

ZincX Resources  VR Resources

Weak diversification

The 3 months correlation between ZincX and VRRCF is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ZincX Resources Corp and VR Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VR Resources and ZincX 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 ZincX Resources Corp are associated (or correlated) with VR Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VR Resources has no effect on the direction of ZincX Resources i.e., ZincX Resources and VR Resources go up and down completely randomly.

Pair Corralation between ZincX Resources and VR Resources

Assuming the 90 days horizon ZincX Resources Corp is expected to under-perform the VR Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, ZincX Resources Corp is 6.55 times less risky than VR Resources. The pink sheet trades about -0.22 of its potential returns per unit of risk. The VR Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2.40  in VR Resources on September 12, 2024 and sell it today you would earn a total of  1.94  from holding VR Resources or generate 80.83% return on investment over 90 days.

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

ZincX Resources Corp  vs.  VR Resources

ZincX Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZincX Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

VR Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VR Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, VR Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZincX Resources and VR Resources

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

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