Correlation Between Prime Mining and Canterra Minerals

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

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

Diversification Opportunities for Prime Mining and Canterra Minerals

0.55

Correlation Coefficient

Prime Mining  Canterra Minerals

Very weak diversification

The 3 months correlation between Prime and Canterra is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Prime Mining Corp and Canterra Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canterra Minerals and Prime Mining 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 Prime Mining Corp are associated (or correlated) with Canterra Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canterra Minerals has no effect on the direction of Prime Mining i.e., Prime Mining and Canterra Minerals go up and down completely randomly.

Pair Corralation between Prime Mining and Canterra Minerals

Assuming the 90 days horizon Prime Mining is expected to generate 1.59 times less return on investment than Canterra Minerals. But when comparing it to its historical volatility, Prime Mining Corp is 1.64 times less risky than Canterra Minerals. It trades about 0.08 of its potential returns per unit of risk. Canterra Minerals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.27  in Canterra Minerals on May 5, 2025 and sell it today you would earn a total of  0.46  from holding Canterra Minerals or generate 7.34% return on investment over 90 days.

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

Prime Mining Corp  vs.  Canterra Minerals

Prime Mining Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Mining Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prime Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Canterra Minerals

Risk-Adjusted Performance

OK

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

Pair Trading with Prime Mining and Canterra Minerals

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

The idea behind Prime Mining Corp and Canterra Minerals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.