Correlation Between Australian Strategic and Edison Cobalt
Can any of the company-specific risk be diversified away by investing in both Australian Strategic and Edison Cobalt 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 Australian Strategic and Edison Cobalt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Strategic Materials and Edison Cobalt Corp, you can compare the effects of market volatilities on Australian Strategic and Edison Cobalt 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 Australian Strategic with a short position of Edison Cobalt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and Edison Cobalt.
Diversification Opportunities for Australian Strategic and Edison Cobalt
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Australian and Edison is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and Edison Cobalt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison Cobalt Corp and Australian Strategic 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 Australian Strategic Materials are associated (or correlated) with Edison Cobalt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison Cobalt Corp has no effect on the direction of Australian Strategic i.e., Australian Strategic and Edison Cobalt go up and down completely randomly.
Pair Corralation between Australian Strategic and Edison Cobalt
Assuming the 90 days horizon Australian Strategic Materials is expected to under-perform the Edison Cobalt. But the pink sheet apears to be less risky and, when comparing its historical volatility, Australian Strategic Materials is 1.8 times less risky than Edison Cobalt. The pink sheet trades about -0.38 of its potential returns per unit of risk. The Edison Cobalt Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 7.93 in Edison Cobalt Corp on August 29, 2024 and sell it today you would lose (1.48) from holding Edison Cobalt Corp or give up 18.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Australian Strategic Materials vs. Edison Cobalt Corp
Performance |
| Timeline |
| Australian Strategic |
| Edison Cobalt Corp |
Australian Strategic and Edison Cobalt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Strategic and Edison Cobalt
The main advantage of trading using opposite Australian Strategic and Edison Cobalt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic position performs unexpectedly, Edison Cobalt 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 Edison Cobalt will offset losses from the drop in Edison Cobalt's long position.| Australian Strategic vs. Rockridge Resources | Australian Strategic vs. Ameriwest Lithium | Australian Strategic vs. Osisko Metals Incorporated | Australian Strategic vs. Volt Lithium Corp |
| Edison Cobalt vs. Rockridge Resources | Edison Cobalt vs. Ameriwest Lithium | Edison Cobalt vs. Osisko Metals Incorporated | Edison Cobalt vs. Volt Lithium Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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