Correlation Between Rock Tech and Wealth Minerals

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

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

Diversification Opportunities for Rock Tech and Wealth Minerals

0.79

Correlation Coefficient

Rock Tech  Wealth Minerals

Poor diversification

The 3 months correlation between Rock and Wealth is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rock Tech Lithium and Wealth Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wealth Minerals and Rock Tech 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 Rock Tech Lithium are associated (or correlated) with Wealth Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wealth Minerals has no effect on the direction of Rock Tech i.e., Rock Tech and Wealth Minerals go up and down completely randomly.

Pair Corralation between Rock Tech and Wealth Minerals

Assuming the 90 days horizon Rock Tech Lithium is expected to generate 0.42 times more return on investment than Wealth Minerals. However, Rock Tech Lithium is 2.39 times less risky than Wealth Minerals. It trades about -0.16 of its potential returns per unit of risk. Wealth Minerals is currently generating about -0.14 per unit of risk. If you would invest  118.00  in Rock Tech Lithium on September 21, 2024 and sell it today you would lose (37.00) from holding Rock Tech Lithium or give up 31.36% of portfolio value over 90 days.

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

Rock Tech Lithium  vs.  Wealth Minerals

Rock Tech Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rock Tech Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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.

Wealth Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wealth Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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.

Pair Trading with Rock Tech and Wealth Minerals

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

The idea behind Rock Tech Lithium and Wealth 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.