Correlation Between Snow Lake and African Rainbow
Can any of the company-specific risk be diversified away by investing in both Snow Lake and African Rainbow 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 Snow Lake and African Rainbow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snow Lake Resources and African Rainbow Minerals, you can compare the effects of market volatilities on Snow Lake and African Rainbow 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 Snow Lake with a short position of African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snow Lake and African Rainbow.
Diversification Opportunities for Snow Lake and African Rainbow
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Snow and African is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Snow Lake Resources and African Rainbow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Rainbow Minerals and Snow Lake 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 Snow Lake Resources are associated (or correlated) with African Rainbow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Rainbow Minerals has no effect on the direction of Snow Lake i.e., Snow Lake and African Rainbow go up and down completely randomly.
Pair Corralation between Snow Lake and African Rainbow
Given the investment horizon of 90 days Snow Lake Resources is expected to under-perform the African Rainbow. In addition to that, Snow Lake is 1.47 times more volatile than African Rainbow Minerals. It trades about -0.04 of its total potential returns per unit of risk. African Rainbow Minerals is currently generating about 0.15 per unit of volatility. If you would invest 949.00 in African Rainbow Minerals on September 14, 2024 and sell it today you would earn a total of 271.00 from holding African Rainbow Minerals or generate 28.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 14.13% |
Values | Daily Returns |
Snow Lake Resources vs. African Rainbow Minerals
Performance |
Timeline |
Snow Lake Resources |
African Rainbow Minerals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Snow Lake and African Rainbow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Snow Lake and African Rainbow
The main advantage of trading using opposite Snow Lake and African Rainbow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snow Lake position performs unexpectedly, African Rainbow 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 African Rainbow will offset losses from the drop in African Rainbow's long position.Snow Lake vs. Core Lithium | Snow Lake vs. Patriot Battery Metals | Snow Lake vs. Lomiko Metals | Snow Lake vs. Vulcan Energy Resources |
African Rainbow vs. Ivanhoe Mines | African Rainbow vs. Glencore PLC | African Rainbow vs. Asia Broadband | African Rainbow vs. Rio Tinto Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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