Correlation Between Boliden AB and Snow Lake

Can any of the company-specific risk be diversified away by investing in both Boliden AB and Snow Lake 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 Boliden AB and Snow Lake into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boliden AB ADR and Snow Lake Resources, you can compare the effects of market volatilities on Boliden AB and Snow Lake 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 Boliden AB with a short position of Snow Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boliden AB and Snow Lake.

Diversification Opportunities for Boliden AB and Snow Lake

0.32

Correlation Coefficient

Boliden AB  Snow Lake

Weak diversification

The 3 months correlation between Boliden and Snow is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB ADR and Snow Lake Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Lake Resources and Boliden AB 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 Boliden AB ADR are associated (or correlated) with Snow Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Lake Resources has no effect on the direction of Boliden AB i.e., Boliden AB and Snow Lake go up and down completely randomly.

Pair Corralation between Boliden AB and Snow Lake

Assuming the 90 days horizon Boliden AB ADR is expected to generate 0.39 times more return on investment than Snow Lake. However, Boliden AB ADR is 2.54 times less risky than Snow Lake. It trades about 0.03 of its potential returns per unit of risk. Snow Lake Resources is currently generating about -0.15 per unit of risk. If you would invest  5,793  in Boliden AB ADR on September 14, 2024 and sell it today you would earn a total of  190.00  from holding Boliden AB ADR or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Boliden AB ADR  vs.  Snow Lake Resources

Boliden AB ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boliden AB ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Boliden AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Snow Lake Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snow Lake Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Boliden AB and Snow Lake

The main advantage of trading using opposite Boliden AB and Snow Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB position performs unexpectedly, Snow Lake 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 Snow Lake will offset losses from the drop in Snow Lake's long position.

The idea behind Boliden AB ADR and Snow Lake Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.