Correlation Between Ceylon Graphite and Ardea Resources

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

By analyzing existing cross correlation between Ceylon Graphite Corp and Ardea Resources Limited, you can compare the effects of market volatilities on Ceylon Graphite and Ardea 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 Ceylon Graphite with a short position of Ardea Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Graphite and Ardea Resources.

Diversification Opportunities for Ceylon Graphite and Ardea Resources

0.68

Correlation Coefficient

Ceylon Graphite  Ardea Resources

Poor diversification

The 3 months correlation between Ceylon and Ardea is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Graphite Corp and Ardea Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardea Resources and Ceylon Graphite 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 Ceylon Graphite Corp are associated (or correlated) with Ardea Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardea Resources has no effect on the direction of Ceylon Graphite i.e., Ceylon Graphite and Ardea Resources go up and down completely randomly.

Pair Corralation between Ceylon Graphite and Ardea Resources

Assuming the 90 days horizon Ceylon Graphite Corp is expected to under-perform the Ardea Resources. In addition to that, Ceylon Graphite is 1.38 times more volatile than Ardea Resources Limited. It trades about -0.06 of its total potential returns per unit of risk. Ardea Resources Limited is currently generating about -0.06 per unit of volatility. If you would invest  27.00  in Ardea Resources Limited on September 13, 2024 and sell it today you would lose (7.00) from holding Ardea Resources Limited or give up 25.93% of portfolio value over 90 days.

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

Ceylon Graphite Corp  vs.  Ardea Resources Limited

Ceylon Graphite Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ceylon Graphite 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.

Ardea Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardea Resources Limited 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 Ceylon Graphite and Ardea Resources

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

The idea behind Ceylon Graphite Corp and Ardea Resources 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.