Correlation Between Cobalt Blue and Champion Bear

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Can any of the company-specific risk be diversified away by investing in both Cobalt Blue and Champion Bear 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 Cobalt Blue and Champion Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cobalt Blue Holdings and Champion Bear Resources, you can compare the effects of market volatilities on Cobalt Blue and Champion Bear 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 Cobalt Blue with a short position of Champion Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cobalt Blue and Champion Bear.

Diversification Opportunities for Cobalt Blue and Champion Bear

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cobalt and Champion is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Blue Holdings and Champion Bear Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Bear Resources and Cobalt Blue 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 Cobalt Blue Holdings are associated (or correlated) with Champion Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Bear Resources has no effect on the direction of Cobalt Blue i.e., Cobalt Blue and Champion Bear go up and down completely randomly.

Pair Corralation between Cobalt Blue and Champion Bear

Assuming the 90 days horizon Cobalt Blue is expected to generate 7.39 times less return on investment than Champion Bear. But when comparing it to its historical volatility, Cobalt Blue Holdings is 3.22 times less risky than Champion Bear. It trades about 0.02 of its potential returns per unit of risk. Champion Bear Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Champion Bear Resources on November 1, 2024 and sell it today you would lose (4.00) from holding Champion Bear Resources or give up 66.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.16%
ValuesDaily Returns

Cobalt Blue Holdings  vs.  Champion Bear Resources

 Performance 
       Timeline  
Cobalt Blue Holdings 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cobalt Blue Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Cobalt Blue reported solid returns over the last few months and may actually be approaching a breakup point.
Champion Bear Resources 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Champion Bear Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Champion Bear reported solid returns over the last few months and may actually be approaching a breakup point.

Cobalt Blue and Champion Bear Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cobalt Blue and Champion Bear

The main advantage of trading using opposite Cobalt Blue and Champion Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cobalt Blue position performs unexpectedly, Champion Bear 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 Champion Bear will offset losses from the drop in Champion Bear's long position.
The idea behind Cobalt Blue Holdings and Champion Bear 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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