Correlation Between Cobalt Power and Richmond Minerals

Can any of the company-specific risk be diversified away by investing in both Cobalt Power and Richmond Minerals 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 Cobalt Power and Richmond Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cobalt Power Group and Richmond Minerals, you can compare the effects of market volatilities on Cobalt Power and Richmond Minerals 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 Cobalt Power with a short position of Richmond Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cobalt Power and Richmond Minerals.

Diversification Opportunities for Cobalt Power and Richmond Minerals

-0.34

Correlation Coefficient

Cobalt Power  Richmond Minerals

Very good diversification

The 3 months correlation between Cobalt and Richmond is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Power Group and Richmond Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richmond Minerals and Cobalt Power 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 Cobalt Power Group are associated (or correlated) with Richmond Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richmond Minerals has no effect on the direction of Cobalt Power i.e., Cobalt Power and Richmond Minerals go up and down completely randomly.

Pair Corralation between Cobalt Power and Richmond Minerals

Assuming the 90 days horizon Cobalt Power Group is expected to under-perform the Richmond Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Cobalt Power Group is 1.64 times less risky than Richmond Minerals. The stock trades about -0.18 of its potential returns per unit of risk. The Richmond Minerals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Richmond Minerals on September 21, 2024 and sell it today you would earn a total of  1.00  from holding Richmond Minerals or generate 50.0% return on investment over 90 days.

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

Cobalt Power Group  vs.  Richmond Minerals

Cobalt Power Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cobalt Power Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Richmond Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Richmond Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Richmond Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cobalt Power and Richmond Minerals

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

The idea behind Cobalt Power Group and Richmond Minerals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.