Correlation Between Clime Investment and Savannah Resources

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

By analyzing existing cross correlation between Clime Investment Management and Savannah Resources Plc, you can compare the effects of market volatilities on Clime Investment and Savannah 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 Clime Investment with a short position of Savannah Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Savannah Resources.

Diversification Opportunities for Clime Investment and Savannah Resources

-0.05

Correlation Coefficient

Clime Investment  Savannah Resources

Good diversification

The 3 months correlation between Clime and Savannah is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Savannah Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savannah Resources Plc and Clime Investment 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 Clime Investment Management are associated (or correlated) with Savannah Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savannah Resources Plc has no effect on the direction of Clime Investment i.e., Clime Investment and Savannah Resources go up and down completely randomly.

Pair Corralation between Clime Investment and Savannah Resources

Assuming the 90 days horizon Clime Investment Management is expected to under-perform the Savannah Resources. In addition to that, Clime Investment is 4.67 times more volatile than Savannah Resources Plc. It trades about -0.03 of its total potential returns per unit of risk. Savannah Resources Plc is currently generating about -0.01 per unit of volatility. If you would invest  5.42  in Savannah Resources Plc on September 26, 2024 and sell it today you would lose (0.90) from holding Savannah Resources Plc or give up 16.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Clime Investment Management  vs.  Savannah Resources Plc

Clime Investment Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clime Investment Management 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.

Savannah Resources Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Clime Investment and Savannah Resources

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

The idea behind Clime Investment Management and Savannah Resources Plc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.