Correlation Between Critical Elements and ZincX Resources

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

By analyzing existing cross correlation between Critical Elements and ZincX Resources Corp, you can compare the effects of market volatilities on Critical Elements and ZincX Resources 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 ZincX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Critical Elements and ZincX Resources.

Diversification Opportunities for Critical Elements and ZincX Resources

0.72

Correlation Coefficient

Critical Elements  ZincX Resources

Poor diversification

The 3 months correlation between Critical and ZincX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and ZincX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZincX Resources Corp 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 ZincX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZincX Resources Corp has no effect on the direction of Critical Elements i.e., Critical Elements and ZincX Resources go up and down completely randomly.

Pair Corralation between Critical Elements and ZincX Resources

Assuming the 90 days horizon Critical Elements is expected to generate 1.38 times more return on investment than ZincX Resources. However, Critical Elements is 1.38 times more volatile than ZincX Resources Corp. It trades about -0.01 of its potential returns per unit of risk. ZincX Resources Corp is currently generating about -0.06 per unit of risk. If you would invest  29.00  in Critical Elements on September 15, 2024 and sell it today you would lose (3.00) from holding Critical Elements or give up 10.34% of portfolio value over 90 days.

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

Critical Elements  vs.  ZincX Resources Corp

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.

ZincX Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZincX Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Critical Elements and ZincX Resources

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

The idea behind Critical Elements and ZincX Resources 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.