Correlation Between Critical Elements and Giga Metals

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

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

Diversification Opportunities for Critical Elements and Giga Metals

0.29

Correlation Coefficient

Critical Elements  Giga Metals

Modest diversification

The 3 months correlation between Critical and Giga is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and Giga Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga Metals and Critical Elements 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 Critical Elements are associated (or correlated) with Giga Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga Metals has no effect on the direction of Critical Elements i.e., Critical Elements and Giga Metals go up and down completely randomly.

Pair Corralation between Critical Elements and Giga Metals

If you would invest  28.00  in Critical Elements on September 17, 2024 and sell it today you would lose (1.00) from holding Critical Elements or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Critical Elements  vs.  Giga Metals

Critical Elements

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Critical Elements has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Critical Elements is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Giga Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Giga Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Critical Elements and Giga Metals

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

The idea behind Critical Elements and Giga Metals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.