Correlation Between BAIYU Holdings and Critical Metals

Can any of the company-specific risk be diversified away by investing in both BAIYU Holdings and Critical Metals 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 BAIYU Holdings and Critical Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BAIYU Holdings and Critical Metals Corp, you can compare the effects of market volatilities on BAIYU Holdings and Critical Metals 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 BAIYU Holdings with a short position of Critical Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIYU Holdings and Critical Metals.

Diversification Opportunities for BAIYU Holdings and Critical Metals

0.51

Correlation Coefficient

BAIYU Holdings  Critical Metals

Very weak diversification

The 3 months correlation between BAIYU and Critical is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp and BAIYU Holdings 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 BAIYU Holdings are associated (or correlated) with Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of BAIYU Holdings i.e., BAIYU Holdings and Critical Metals go up and down completely randomly.

Pair Corralation between BAIYU Holdings and Critical Metals

Considering the 90-day investment horizon BAIYU Holdings is expected to under-perform the Critical Metals. In addition to that, BAIYU Holdings is 1.39 times more volatile than Critical Metals Corp. It trades about -0.31 of its total potential returns per unit of risk. Critical Metals Corp is currently generating about -0.04 per unit of volatility. If you would invest  30.00  in Critical Metals Corp on August 30, 2024 and sell it today you would lose (9.00) from holding Critical Metals Corp or give up 30.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.19%
Values	Daily Returns

BAIYU Holdings  vs.  Critical Metals Corp

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Critical Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Critical Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BAIYU Holdings and Critical Metals

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

The idea behind BAIYU Holdings and Critical Metals Corp 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.