Correlation Between Critical Elements and Sayona Mining
Can any of the company-specific risk be diversified away by investing in both Critical Elements and Sayona Mining 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 Sayona Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Critical Elements and Sayona Mining Limited, you can compare the effects of market volatilities on Critical Elements and Sayona Mining 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 Sayona Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Critical Elements and Sayona Mining.
Diversification Opportunities for Critical Elements and Sayona Mining
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Critical and Sayona is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and Sayona Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sayona Mining Limited 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 Sayona Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sayona Mining Limited has no effect on the direction of Critical Elements i.e., Critical Elements and Sayona Mining go up and down completely randomly.
Pair Corralation between Critical Elements and Sayona Mining
Assuming the 90 days horizon Critical Elements is expected to under-perform the Sayona Mining. But the otc stock apears to be less risky and, when comparing its historical volatility, Critical Elements is 2.1 times less risky than Sayona Mining. The otc stock trades about -0.34 of its potential returns per unit of risk. The Sayona Mining Limited is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1.67 in Sayona Mining Limited on November 2, 2024 and sell it today you would lose (0.34) from holding Sayona Mining Limited or give up 20.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Critical Elements vs. Sayona Mining Limited
Performance |
| Timeline |
| Critical Elements |
| Sayona Mining Limited |
Critical Elements and Sayona Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Critical Elements and Sayona Mining
The main advantage of trading using opposite Critical Elements and Sayona Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Critical Elements position performs unexpectedly, Sayona Mining 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 Sayona Mining will offset losses from the drop in Sayona Mining'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 |
| Sayona Mining vs. Hannan Metals | Sayona Mining vs. Atco Mining | Sayona Mining vs. Leading Edge Materials | Sayona Mining vs. Arianne Phosphate |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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