Correlation Between Cobalt Power and Pacific Bay
Can any of the company-specific risk be diversified away by investing in both Cobalt Power and Pacific Bay 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 Power and Pacific Bay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cobalt Power Group and Pacific Bay Minerals, you can compare the effects of market volatilities on Cobalt Power and Pacific Bay 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 Power with a short position of Pacific Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cobalt Power and Pacific Bay.
Diversification Opportunities for Cobalt Power and Pacific Bay
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cobalt and Pacific is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Power Group and Pacific Bay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Bay Minerals and Cobalt Power 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 Power Group are associated (or correlated) with Pacific Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Bay Minerals has no effect on the direction of Cobalt Power i.e., Cobalt Power and Pacific Bay go up and down completely randomly.
Pair Corralation between Cobalt Power and Pacific Bay
Assuming the 90 days horizon Cobalt Power Group is expected to under-perform the Pacific Bay. But the stock apears to be less risky and, when comparing its historical volatility, Cobalt Power Group is 1.45 times less risky than Pacific Bay. The stock trades about -0.38 of its potential returns per unit of risk. The Pacific Bay Minerals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Pacific Bay Minerals on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Pacific Bay Minerals or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cobalt Power Group vs. Pacific Bay Minerals
Performance |
| Timeline |
| Cobalt Power Group |
| Pacific Bay Minerals |
Cobalt Power and Pacific Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cobalt Power and Pacific Bay
The main advantage of trading using opposite Cobalt Power and Pacific Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cobalt Power position performs unexpectedly, Pacific Bay 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 Pacific Bay will offset losses from the drop in Pacific Bay's long position.| Cobalt Power vs. First Majestic Silver | Cobalt Power vs. Ivanhoe Energy | Cobalt Power vs. Orezone Gold Corp | Cobalt Power vs. Faraday Copper Corp |
| Pacific Bay vs. First Majestic Silver | Pacific Bay vs. Ivanhoe Energy | Pacific Bay vs. Orezone Gold Corp | Pacific Bay vs. Faraday Copper 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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