Correlation Between Critical Elements and Searchlight Resources
Can any of the company-specific risk be diversified away by investing in both Critical Elements and Searchlight 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 Critical Elements and Searchlight Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Critical Elements and Searchlight Resources, you can compare the effects of market volatilities on Critical Elements and Searchlight 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 Critical Elements with a short position of Searchlight Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Critical Elements and Searchlight Resources.
Diversification Opportunities for Critical Elements and Searchlight Resources
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Critical and Searchlight is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and Searchlight Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Resources and Critical Elements 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 Critical Elements are associated (or correlated) with Searchlight Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Resources has no effect on the direction of Critical Elements i.e., Critical Elements and Searchlight Resources go up and down completely randomly.
Pair Corralation between Critical Elements and Searchlight Resources
Assuming the 90 days horizon Critical Elements is expected to under-perform the Searchlight Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Critical Elements is 10.58 times less risky than Searchlight Resources. The otc stock trades about -0.34 of its potential returns per unit of risk. The Searchlight Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.69 in Searchlight Resources on November 2, 2024 and sell it today you would earn a total of 0.09 from holding Searchlight Resources or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Critical Elements vs. Searchlight Resources
Performance |
| Timeline |
| Critical Elements |
| Searchlight Resources |
Critical Elements and Searchlight Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Critical Elements and Searchlight Resources
The main advantage of trading using opposite Critical Elements and Searchlight Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Critical Elements position performs unexpectedly, Searchlight 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 Searchlight Resources will offset losses from the drop in Searchlight Resources' long position.| Critical Elements vs. Argosy Minerals Limited | Critical Elements vs. Aurelia Metals Limited | Critical Elements vs. Artemis Resources | Critical Elements vs. Ascendant Resources |
| Searchlight Resources vs. Pampa Metals | Searchlight Resources vs. Progressive Planet Solutions | Searchlight Resources vs. Durango Resources | Searchlight Resources vs. Avarone Metals |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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