Correlation Between FLOW TRADERS and Chalice Mining

Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and Chalice Mining 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 FLOW TRADERS and Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FLOW TRADERS LTD and Chalice Mining Limited, you can compare the effects of market volatilities on FLOW TRADERS and Chalice Mining 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 FLOW TRADERS with a short position of Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Chalice Mining.

Diversification Opportunities for FLOW TRADERS and Chalice Mining

-0.12

Correlation Coefficient

FLOW TRADERS  Chalice Mining

Good diversification

The 3 months correlation between FLOW and Chalice is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and Chalice Mining go up and down completely randomly.

Pair Corralation between FLOW TRADERS and Chalice Mining

Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.33 times more return on investment than Chalice Mining. However, FLOW TRADERS LTD is 3.06 times less risky than Chalice Mining. It trades about 0.16 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.12 per unit of risk. If you would invest  1,862  in FLOW TRADERS LTD on September 30, 2024 and sell it today you would earn a total of  268.00  from holding FLOW TRADERS LTD or generate 14.39% return on investment over 90 days.

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

FLOW TRADERS LTD  vs.  Chalice Mining Limited

FLOW TRADERS LTD

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining 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 FLOW TRADERS and Chalice Mining

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

The idea behind FLOW TRADERS LTD and Chalice Mining 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.