Correlation Between Metals X and Champion Bear
Can any of the company-specific risk be diversified away by investing in both Metals X 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 Metals X and Champion Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals X Limited and Champion Bear Resources, you can compare the effects of market volatilities on Metals X 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 Metals X with a short position of Champion Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals X and Champion Bear.
Diversification Opportunities for Metals X and Champion Bear
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Metals and Champion is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited 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 Metals X 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 Metals X Limited 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 Metals X i.e., Metals X and Champion Bear go up and down completely randomly.
Pair Corralation between Metals X and Champion Bear
Assuming the 90 days horizon Metals X is expected to generate 10.29 times less return on investment than Champion Bear. But when comparing it to its historical volatility, Metals X Limited is 7.88 times less risky than Champion Bear. It trades about 0.05 of its potential returns per unit of risk. Champion Bear Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Champion Bear Resources on September 1, 2024 and sell it today you would earn a total of 3.00 from holding Champion Bear Resources or generate 300.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals X Limited vs. Champion Bear Resources
Performance |
| Timeline |
| Metals X Limited |
| Champion Bear Resources |
Metals X and Champion Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals X and Champion Bear
The main advantage of trading using opposite Metals X and Champion Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals X 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.| Metals X vs. Eramet SA ADR | Metals X vs. NGEx Minerals | Metals X vs. Forum Energy Metals | Metals X vs. Adriatic Metals Plc |
| Champion Bear vs. Aurelia Metals Limited | Champion Bear vs. Baroyeca Gold Silver | Champion Bear vs. Centaurus Metals Limited | Champion Bear vs. Edison Cobalt 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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