Correlation Between Edison Cobalt and Ceylon Graphite
Can any of the company-specific risk be diversified away by investing in both Edison Cobalt and Ceylon Graphite 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 Edison Cobalt and Ceylon Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison Cobalt Corp and Ceylon Graphite Corp, you can compare the effects of market volatilities on Edison Cobalt and Ceylon Graphite 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 Edison Cobalt with a short position of Ceylon Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison Cobalt and Ceylon Graphite.
Diversification Opportunities for Edison Cobalt and Ceylon Graphite
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Edison and Ceylon is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Edison Cobalt Corp and Ceylon Graphite Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Graphite Corp and Edison Cobalt 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 Edison Cobalt Corp are associated (or correlated) with Ceylon Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Graphite Corp has no effect on the direction of Edison Cobalt i.e., Edison Cobalt and Ceylon Graphite go up and down completely randomly.
Pair Corralation between Edison Cobalt and Ceylon Graphite
Assuming the 90 days horizon Edison Cobalt Corp is expected to generate 1.82 times more return on investment than Ceylon Graphite. However, Edison Cobalt is 1.82 times more volatile than Ceylon Graphite Corp. It trades about 0.05 of its potential returns per unit of risk. Ceylon Graphite Corp is currently generating about -0.09 per unit of risk. If you would invest 8.11 in Edison Cobalt Corp on September 12, 2024 and sell it today you would lose (0.78) from holding Edison Cobalt Corp or give up 9.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Edison Cobalt Corp vs. Ceylon Graphite Corp
Performance |
Timeline |
Edison Cobalt Corp |
Ceylon Graphite Corp |
Edison Cobalt and Ceylon Graphite Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Edison Cobalt and Ceylon Graphite
The main advantage of trading using opposite Edison Cobalt and Ceylon Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison Cobalt position performs unexpectedly, Ceylon Graphite 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 Ceylon Graphite will offset losses from the drop in Ceylon Graphite's long position.Edison Cobalt vs. Baroyeca Gold Silver | Edison Cobalt vs. Aurelia Metals Limited | Edison Cobalt vs. China Rare Earth | Edison Cobalt vs. Champion Bear Resources |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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