Correlation Between Critical Elements and South Star
Can any of the company-specific risk be diversified away by investing in both Critical Elements and South Star 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 South Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Critical Elements and South Star Battery, you can compare the effects of market volatilities on Critical Elements and South Star 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 South Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Critical Elements and South Star.
Diversification Opportunities for Critical Elements and South Star
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Critical and South is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and South Star Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Star Battery 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 South Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Star Battery has no effect on the direction of Critical Elements i.e., Critical Elements and South Star go up and down completely randomly.
Pair Corralation between Critical Elements and South Star
Assuming the 90 days horizon Critical Elements is expected to under-perform the South Star. But the otc stock apears to be less risky and, when comparing its historical volatility, Critical Elements is 1.34 times less risky than South Star. The otc stock trades about -0.42 of its potential returns per unit of risk. The South Star Battery is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 44.00 in South Star Battery on September 1, 2024 and sell it today you would lose (5.00) from holding South Star Battery or give up 11.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Critical Elements vs. South Star Battery
Performance |
| Timeline |
| Critical Elements |
| South Star Battery |
Critical Elements and South Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Critical Elements and South Star
The main advantage of trading using opposite Critical Elements and South Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Critical Elements position performs unexpectedly, South Star 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 South Star will offset losses from the drop in South Star's long position.| Critical Elements vs. Argosy Minerals Limited | Critical Elements vs. Aurelia Metals Limited | Critical Elements vs. Artemis Resources | Critical Elements vs. Ascendant Resources |
| South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Qubec Nickel Corp | South Star vs. Rockridge Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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