Correlation Between Chilwa Minerals and Chalice Mining

Can any of the company-specific risk be diversified away by investing in both Chilwa Minerals and Chalice 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 Chilwa Minerals and Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chilwa Minerals Limited and Chalice Mining Limited, you can compare the effects of market volatilities on Chilwa Minerals and Chalice 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 Chilwa Minerals with a short position of Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chilwa Minerals and Chalice Mining.

Diversification Opportunities for Chilwa Minerals and Chalice Mining

0.67

Correlation Coefficient

Chilwa Minerals  Chalice Mining

Poor diversification

The 3 months correlation between Chilwa and Chalice is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chilwa Minerals Limited and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and Chilwa Minerals 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 Chilwa Minerals Limited are associated (or correlated) with Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Chilwa Minerals i.e., Chilwa Minerals and Chalice Mining go up and down completely randomly.

Pair Corralation between Chilwa Minerals and Chalice Mining

Assuming the 90 days trading horizon Chilwa Minerals Limited is expected to under-perform the Chalice Mining. But the stock apears to be less risky and, when comparing its historical volatility, Chilwa Minerals Limited is 1.37 times less risky than Chalice Mining. The stock trades about -0.08 of its potential returns per unit of risk. The Chalice Mining Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Chalice Mining Limited on September 24, 2024 and sell it today you would lose (20.00) from holding Chalice Mining Limited or give up 15.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Chilwa Minerals Limited  vs.  Chalice Mining Limited

Chilwa Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chilwa Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Chilwa Minerals and Chalice Mining

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

The idea behind Chilwa Minerals Limited and Chalice Mining Limited 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.